Platt Perspective on Business and Technology

Meshing innovation, product development and production, marketing and sales as a virtuous cycle 5

Posted in business and convergent technologies, strategy and planning by Timothy Platt on June 19, 2017

This is my fifth installment to a series in which I reconsider cosmetic and innovative change as they impact upon and even fundamentally shape the product design and development, manufacturing, marketing, distribution and sales cycle, and from both the producer and consumer perspectives (see Ubiquitous Computing and Communications – everywhere all the time 2, postings 342 and loosely following for Parts 1-4.)

I have been discussing virtuous and vicious cycles in businesses, as they alternatively pursue proactive and reactive approaches to change (see Part 2, Part 3 and Part 4.) And at the end of Part 4, I stated that I would more fully discuss the paths to change that these businesses would respond to and in both its evolutionary and disruptively revolutionary forms.

• This means discussing what businesses respond to, and in the specific context of this series, as they respond in patterns of decision and action, review and further decision and action that can have recurringly cyclical elements to them.
• And it means addressing how they would respond at a higher level strategic and overall operational level and not just at a day-to-day, here-and-now details level, and certainly if they do so effectively.
• In anticipation of that point, I cited agility and resiliency as organizational goals – and as buffering mechanisms against the down-sides of change.
• And I indicated that I would return to my restaurant example of Part’s 3 and 4 to add in another complicating factor there. I initially presented this case study example in negative terms, and in term of what I have come to call the “restaurant death spiral” scenario: an unfortunately real phenomenon that I have seen play out a number of times, and for its basic form in more than just restaurants. I then turned that scenario on its head and away from that initial vicious cycle pattern, to illustrate how a restaurant in precisely the same situation that launched my Part 3 vicious cycle pattern, could instead pursue a success creating virtuous cycle response (in Part 4.) My goal here is to add in a new contingency (that I add here is based on fact but that might I admit seem a bit historically dated now), that in effect stress tests that virtuous cycle approach with an unpredictable adversity. The question there, is one of exactly how robust this business has made itself as it seeks to redevelop itself through its virtuous cycle of change and improvement, and next step change and improvement. And this is where agility and resiliency enter in, as noted in the immediately preceding bullet point.

I am going to begin this overall thread of discussion with the specific case in point example of that last bullet point, and then address the first three points at least in part in terms of this example, as a means of taking my overall narrative here out of the entirely-abstract.

I suggest you’re at least briefly reviewing Parts 3 and 4, for their discussion of this restaurant example, and Part 4 in particular as I turn to consider a more positive and productive approach to restaurant turn-around and recovery. But in brief, this case study example involves a failing restaurant that turned itself around by among other things switching from easier to procure canned and otherwise processed ingredients, to a more knowledge and labor demanding local fresh and farm to table approach.

Local in-season produce and I add locally sourced eggs and dairy, meat, fish and poultry can be both better quality and more appealing to the customer for what you can do with them. And they can be less expensive for the restaurant at the same time. It is just that these locally sourced and farm-to-table fresh ingredients require a lot more knowledge of how and where to locally source, and this requires a great deal more effort and in networking to local sources and building relationships with them, and in making purchases from a much more widespread and diverse range of sources. Picking up on that last point, this means not being able to turn to one or a few wholesaler middlemen, but along with buying and being able to cook with fresher, this also means cutting out middleman businesses that can and do add to costs paid as they add in markups to cover their expenses and to bring in a profit for themselves too. I repeat the up-side of this here. Now I toss in that complication that I warned I would add to this happy, virtuous cycle success story:

• Consider the potential consequences of weather-related crop failures.

Late heavy frosts and freezes in places like the Northeast in the United States can essential destroy crops for a season that would normally be starting their growth cycles early. This year, in the Northeast, as a very specific case in point, essentially all of the trees that produce fruit with stony pits, such as peaches or nectarines were hard-hit and overall crops for a lot of growers were essentially devastated by this. Weather related losses of this and a variety of other types can hit corn or tomatoes or essentially any other produce crop. And that type of loss impacts on both the growers who can lose significantly from what should be their year’s peak income seasons, and on their customers: wholesalers and other resellers, and customers such as farm to table restaurants definitely included.

What should a restaurant such as the one of this series’ example do if they suddenly find that crop failure has really seriously impacted on a significant range of the locally sourced ingredients that they would now normally turn to and require? I answer that by raising at least a few of the first round questions that such a restaurant owner would start asking:

• As a set of questions to the farmers who are now their regular providers of produce and other ingredients for their kitchen: How severe is this loss? How much of your expected crop if any, is going to be available this year and at what price? How much of that and of what I need at my restaurant can be made available to me and my business?
• If appropriate for the type of crop failure in question and the timing involved: Can you replant and have a later harvest run, and of so when and with what delays? Some types of crops routinely offer more than just one crop per year so for them, a late frost for example, might simply mean that type of product arriving at the restaurant later than usual for a first crop, though possibly at higher per unit price then too.
• As a set of questions for consideration inside the restaurant: Should we try buying fresh for at least some ingredients that we see as more indispensible, or should we try making perhaps radical changes to our menu to stay locally farm to table? And where should we take each of these two approaches in our purchasing and menu planning considerations?
• And of course, what will this do to our restaurant’s finances, and both from having to buy rarer commodities that are more expensive now as a result, and from possible loss of customers if the menu cannot be kept as appealing to them? Consider an Italian restaurant that suddenly cannot buy fresh local tomatoes that he has been planning on for seasonal pasta sauces that absolutely require them?
• In that case, consider specific Italian tomato varietals such as Costoluto Genovese, or San Marzano. Only tomatoes of these types that are grown in Italy and in their specific areas of origin can be identified as such, in the same way that a number of wine varieties can only be called by their traditional names if they are produced in their traditional domains: their traditional growing and production regions (e.g. Chianti in one of the eight so called Chianti districts in Tuscany, Italy.) But many of these traditional varietals are also grown outside of their sites and regions of origin and sold under different names, and locally fresh.
• Should this restaurant by from more distant sources and get tomatoes that were perhaps picked earlier and greener for travel, or should they very selectively go back to canned again, for high quality canned Italian San Marzano tomatoes, for example? Note: tomatoes can be harvested and shipped green and even fully green and ripened off of the vine – but they never taste the same when they are as when they are ripened on the vine. And this can have real on any food prepared with them and its taste and quality.

If the owner of this restaurant – here imagined as an at least largely Italian one, is now really firmly committed to farm to table and away from canned anything, but the fresh tomatoes they can get from more distant sources just do not meet their quality standards, this would put them in a real quandary. Fresh tomato and basil sauce would be out of the question however this decision were resolved, at least until locally gown higher quality tomatoes could be made available again. What should be done?

I realize that people who have never worked in or with a restaurant of this type, might see this as a trivial and artifactually contrived case in point example (unless that is they are real foodies, to use a current term of choice.) But for the owners of this restaurant or ones like it, the type of challenge that I have tried to present here, can be consequential and it can strike to the heart of what they seek their restaurant: their dream to be. And decisions made and follow through actions taken lead to next round decisions and actions too.

Picking up on the third of the four bullet points that I have been focusing on here, and with my above discussion of the fourth of them in mind, building for agility and resiliency can call for making difficult decisions. And it can mean thinking through and preparing for scenarios and possibilities that would be anything but comforting, and that might even be very disturbing as sources of possible emerging challenge.

I am going to continue this discussion in a next series installment where I will start at the top of my four bullet point, to-address list and more fully consider the first three:

• This means discussing what businesses respond to, and in the specific context of this series, as they respond in patterns of decision and action, review and further decision and action that can have recurringly cyclical elements to them.
• And it means addressing how they would respond at a higher level strategic and overall operational level and not just at a day-to-day, here-and-now details level, and certainly if they do so effectively.
• In anticipation of that point, I cited agility and resiliency as organizational goals – and as buffering mechanisms against the down-sides of change.

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. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

Innovation, disruptive innovation and market volatility 33: innovative business development and the tools that drive it 3

Posted in business and convergent technologies, macroeconomics by Timothy Platt on June 9, 2017

This is my 33rd 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 6-32.)

I offered a to-address list of topic points towards the top of Part 32, that I repeat here for continuity of discussion, as my goal here is to continue delving into them in follow-up to that posting:

1. Innovation and its realization are information and knowledge driven.
2. And the availability and effective use of raw information and of more processed knowledge developed from it, coupled with an ability to look beyond the usual blinders of how that information and knowledge would be more routinely viewed and understood, to see wider possibilities inherent in it,
3. Make innovation and its practical realization possible and actively drive them.
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.

I focused on Point 1 of this list in Part 32, and then stated at the end of it that I would turn to consider Point 2 here. I am going to do so but to set the stage for that, I want to at least begin by clarifying and explaining a point of terminology that I raised in Part 32 when discussing innovation per se. Innovation might be more minor and incremental in form or it might be more dramatic and overtly consequential, and disruptive innovation usually represents the more fundamental change end of that continuum. I noted that there is a gray area between innovation as a more general term and when more evolutionary change is considered, and overtly disruptive innovation, but without fully clarifying what I mean by that. Part of an explanation as to what this gray area represents, simply means that incremental change can mean smaller or larger increments on the one side, and that new and novel can be profoundly new and unexpected, or only somewhat new and novel; innovation does fall along at least something of a continuum as to the level and degree of novelty arrived at and even if we all tend to think more in terms of extremes and certainly for identifying the more disruptive-facing end of that continuum. But this explanation only tells one half of the story that I seek to convey in that term.

I in effect prepared to explain the other half of “gray area” in this context in Part 32, when I wrote of information and processed knowledge partitioning in an organization, in the context of business systems friction in information management: the ongoing cyclical processes of data collection and vetting, knowledge development from it, access and communications and use of both raw and processed knowledge and information, and their challenges.

I discussed this in terms of conundrums, where the same processes that can lead to risk reduction from prevention of sensitive information falling into the wrong hands, can also lead to the creation of barriers to effective legitimate information sharing too, and certainly where possible disruptive innovation development can call for new and novel patterns of who legitimately should be brought into an information sharing conversation. And as stated up to here at least, that just addresses the more contrived and planned-out, side to information sharing and its control, leaving out more entirely ad hoc decision making options and their use in information policy and information management.

• In practice, businesses face real risk of porosity, and unexpected information transfer out of the areas where specific forms of sensitive data and knowledge belongs, and into areas where it should not go, coupled with the equally unintended development of barriers to acceptable and even essential information and knowledge transfer and sharing.
• Information access and control processes and practices in actual day-to-day use can and all too often do leave the door open to sensitive information transfer and visibility where they should be limited and blocked, while limiting and blocking where they should be more open and communicative – and particularly, for the later, where novel lines of communication and information sharing would be called for, as for example when developing a disruptively new innovative opportunity and in ways that can lead it to a production line and profitability. I repeat this detail intentionally here.
• Let me pick up on and highlight a crucially important aspect of this, to clarify what I am addressing in these points. If the gold standard for controlling and managing sensitive and confidential information is to be found in developing and following explicit rules-based access and storage systems, and ones that can be largely automated with explicitly rules based, established permissions assigned to anyone who in principle might be involved in this information sharing, then novel and unexpected and unplanned for communications requirements that would bring in unusual combinations of experience and expertise into a conversation, would likely be blocked and certainly for proprietary and closely held in-house business intelligence and as both raw data and as more processed knowledge – barring explicit exception making decisions.

And this brings me to a scenario that I briefly touched upon in Part 32 where a business fails to develop a new and potentially very profitable innovation, and even a disruptively novel one, and even though it has had all of the pieces to that puzzle in place, because they cannot bring what they know together and into production. So another, competing business that may have started much later in the race to develop that type of innovation gets there first. And this sheds a whole new light on that “gray area,” where a lack of effective business intelligence development and sharing, and for actionable processed knowledge in particular, can mean real innovation and even disruptively novel innovation going essentially completely unrecognized for the value potential that it carries. Barriers there can prevent event the potentially most valuable disruptive innovation from ever taking place, and from being brought to market if started upon.

• If the gray area in the innovation continuum that I made note of in Part 32 represents a perhaps-rapidly evolving but still just incremental and perhaps-disruptively new, middle ground area along a continuum, where different viewers might rate the level and significance of change differently,
• That gray area also represents an area of friction-clouded uncertainty and of loss of visibility, where innovation and its potential are not going to even be visible and for at least some of those who should be key stakeholders of innovative change and advancement. And when that “some” includes the key gatekeepers who control which developments can be prototyped and which of them can be developed for production and brought into market-facing production, that can have long-term consequences.

I cited an earlier series in Part 32, with essentially this same area of concern in mind that I repeat here for its importance: Keeping Innovation Fresh, as can be found at Business Strategy and Operations – 2, as postings 241 and loosely following. And once again, see its Part 2: Xerox PARC and Menlo Park and its Part 3 continuation of that in particular, for their relevance here. The Xerox PARC research facility is renowned for both the volume and importance of the innovations that its researchers conceived, and the much smaller proportion of those innovation opportunities that its parent company ever allowed to be developed in-house and to their own profitability and benefit.

So the gray area that I touched upon so briefly in Part 32 and that I have been exploring in more detail here, is both a product of more objective reality where not all change is equal is scale, and subjective, and subject to information barrier-facilitated friction, if not always information barrier-creating friction. And with this stated, I overtly acknowledge that I have written this entire posting up to here as a direct and immediate response to Point 2 of the to-address list that I repeated towards the top of this posting.

Blinders can come from preconception and bias and even when all of the information that could possibly be needed to take a next conceptual leap is right in front of us. But more insidiously, those blinders can come from a lack of essential information that might be fully developed and in-principle available in-house, but that is so scattered in non-communicating offices that the people who would most need it are constrained to be unaware of it. Then they cannot even know enough of what is in-principle available for them to know and act upon, for them to even just realize that they are missing something – and even when that is a vital something.

I am going to continue this discussion in a next series installment where I will address Point 3 in the above list:

• Making innovation and its practical realization possible and actively drive them.

In anticipation of that line of discussion to come, this means my addressing approaches for both identifying where deleterious information and knowledge bottlenecks and barriers have arisen and remediating them, while still meeting genuine information access control requirements. And I will explicitly consider disruptive innovation, where novel and unexpected patterns of information and expertise sharing might be essential for timely success, that would call for both precise and flexible rules-based systems for allowed sensitive information sharing, with explicit exception handling capabilities built into them.

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.

Rethinking vertical integration for the 21st century context 16

Posted in business and convergent technologies, strategy and planning by Timothy Platt on June 7, 2017

This is my 16th installment to a series on what goes into an effectively organized and run, lean and agile business, and how that is changing in the increasingly ubiquitously connected context that all businesses, and that all individuals operate in (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 577 and loosely following for Parts 1-15.)

I have been discussing symmetrical and asymmetrical business-to-business relationships in supply chain and other collaborative relationships for several installments of this series now, at least as a matter of general principle. And I have done so by way of several case in point examples, including Apple, Inc. (with that case study discussed through much of this series), FedEx (in Part 14), and Eastman Kodak (in Part 15.) My goal for this posting is to at least begin to reconsider the issues raised there, in much more operational terms and from both sides of the table when negotiating and carrying out these business agreements, and from both shorter and longer-term timeframe perspectives.

I begin addressing this set of points with a basic question. And it is one that effectively shapes the operations-level nature of the relationship between collaborating businesses in any such ongoing business-to-business system:

• What defines primacy of place in establishing asymmetry of strength and position in these relationships, where and as it arises?

Let’s consider three possible answers to that question, all of which can be valid and true depending on the specific case-in-point examples considered:

1. Primacy of place can be determined essentially entirely on the basis of scope and reach, and certainly when one business in such a collaboration is responsible for and owner of most of a large and comprehensive business process system, and partner businesses that it works with only individually manage and hold responsibility for small add-on elements to what that controlling member business does.
2. Primacy of place can be determined by which business provides the compatibility standards that have to be followed, that all participating business would have to adhere to in collectively providing a consistently functional product and bringing it to market. This can hold whenever proprietary formatting or other standards are in play and owned by one participating business in such a collaborative system of them.
3. And primacy of place in this can be determined by the marketplace, when one business in what might even be a complex collaborative system has come to be seen as owning the collectively created brand, and its standards of excellence in meeting publically perceived needs.

Obviously, a single company can gain primacy of place in its collaborations according to one, two or even all three of these criteria. And I would cite Apple, Inc. as an example of a business that has achieved this for all three. They selectively farm out and outsource a wide range of productive activity, and both in hardware and software production, and certainly for hardware as it is produced according to their standards. They are the most wide-reaching and controlling partner in the supply chain systems that they enter into, and are first among (not really) equals in any and all business-to-business collaborations that they participate in, according to the Point 1 criterion as just noted above. But they also own and actively control ownership and usage of Apple branded standards and formats, and they determine what is and is not going to be allowed into them, that might be more open-source as to formatting – to the to the extent that they allow for that at all (e.g. their supporting bluetooth connectivity as a layer in an otherwise proprietary connectivity format protocol stack.) And Apple definitely owns and controls its brand and its name recognition. From a consumer perspective, anything they acquire from or through an Apple store, and either from a bricks and mortar storefront or online, comes entirely from Apple, Inc. Everything so offered is an Apple product. The partner businesses that contribute to Apple products are entirely eclipsed in branding and name recognition and very few Apple users could name even just one partner business that contributes, for example some specialty hardware component, or even a partner business that plays a key role in overall assembly of at least one line of Apple products.

With this in mind, I come to a second defining question:

• If as in the case of Apple, one partner business predominates and in a way that leaves all other participating businesses essentially invisible to end-user and purchasing markets, then where would these “lesser partners” gain value here?

The answer to that is easy: sales and profitable revenue generation. Ultimately, it is business effectiveness and capacity to create marketable value and revenue flow to match it, that count here, and it does not matter how widely known their role is in the collaborative systems they participate in, in order for them to reach their value creation and profitability goals. And this brings me directly to the issues and questions of operational systems and:

• Making sure as an ongoing due diligence requirement, that all operational processes in place in supportive partner businesses in these collaborations,
• Actively support those systems that they have entered into that actively drive their revenue generation and that actively sustain them in the process.

This means more minor supporting businesses seeking to participate in supply chain and related systems, in ways that bring positive value to all participants, as a means of keeping these collaborative systems stably profitable for themselves. And a well-run leading partner business in asymmetrical business-to-business collaborations will actively seek to positively support its smaller supporting partner businesses too, as the success of their supporting partners feeds into their own by helping those businesses to more effectively meet their needs and in a timely and cost-effective manner. Switching perspectives there and certainly from a longer-term perspective, a leading partner business in such collaborations risks losing access to good collaborative partner businesses if it gains a reputation for burning supporting businesses. The best supplier and specialty provider businesses that it would seek to work with and gain value from in this manner, essentially always have choices in which other businesses they would work with. And if they see a prospective collaborative opportunity as offering more risk than positive benefit to themselves, they will go elsewhere leaving that perhaps larger potential partner with fewer and lesser value options to work with in meeting their perhaps most pressing outside-sourced needs.

The above two bullet points and the paragraph that follow them sound reasonable on one level and can be, and accurately so. But they contain within them some assumptions that do not always hold true. I am going to conclude this posting by at least starting to identify and address them, beginning with the two bullet points and from the smaller, supporting business side of a business-to-business collaboration.

Yes, a business that seeks to gain value from entering into and participating in a business-to-business collaboration is going to benefit from making an effort to arrive at and maintain a mutually beneficial relationship there. And this means making the connecting systems and processes that functionally define an ongoing recurring collaboration reliable, predictable, timely and cost-effective – and for all concerned. This certainly applies in the short-term, and when dealing with current collaborations and the current context that might make them profitably worthwhile. But longer-term, it is vitally important that any business that enters into business-to-business collaborations remain flexible too, as circumstances can change. If a smaller business that for example produces and provides some specific line of parts or subassemblies for other manufacturers, takes on a single larger partner business as its sole client, and loses that business and even just briefly, it might fail into bankruptcy as a result and quickly if it does not have adequate reserves or back-up plans.

I wrote of Apple’s proprietary standards above, when briefly outlining how it is the largest and more powerful partner in any business-to-business collaboration that it enters into. What would happen to one of its smaller supporting partners if Apple were to suddenly walk away from them when their contract to work together comes up for renewal – and without warning from Apple that this was even being considered? Consider a smaller partner business that has put itself in the position of only manufacturing for Apple as its sole client, and to Apple’s proprietary standards and formats. And now it quite unexpectedly has to find new client businesses and retool its production lines away from what it has been doing for this one client company, if it is to manufacture for other partner businesses, and with all of the next-step, up-front costs that that entails.

• Longer-term due diligence means balancing ongoing and long-term flexibility and capacity for resilience, with here-and-now and shorter term need to efficiently meet current business contracts and transactional requirements.
• And this becomes particularly, critically important when a smaller business or really any business finds itself beholden to a single client business as the sole purchaser of all that it provides that would bring revenue into its coffers.

And from a leading business perspective in such collaborations, needs and requirements change. And their due diligence analyses and the decisions that arise from them can in fact lead those businesses to make changes in their selection of which other businesses they would actively collaborate with. This can mean changing what they require from the partner businesses that they work with, where meeting new requirements would entail significant retooling and other costs on a partner business’ part. Or it could mean cutting back the level of business carried out collaboratively with a current partner business, or it can even mean ending such a relationship with them entirely – and even at least relatively abruptly. So the points I made above that I have been commenting upon here, apply in the shorter term and when such collaborations are mutually beneficial. But circumstances and due diligence decision making conditions can change and certainly over longer stretches of time. Both sides of a business-to-business collaboration should strive to make these relationships work and profitably for all involved while they are in force. But such collaborations begin, and with time they end too. This also has to be taken into account.

I have been running a concurrent series on a general theory of business as Section VI of Reexamining the Fundamentals, in which I discuss businesses and their collaborations in terms of general principles. And one of the approaches that I have been delving into there is the application of game theory to understanding business decision making and its follow through in actions taken (starting with its Part 12: Some Thoughts Concerning a General Theory of Business 12: considering first steps toward developing a general theory of business 4.) Think of the two bullet points and following paragraph that I have just been commenting on here, as representing an implicitly win-win game strategy approach. And think of my commentary in follow-up to that as allowing for a more win-lose approach as well. I offer this comment here to connect this series to that one as a source of foundational background to what I have been offering here. And I offer this note to highlight how different businesses in supply chain and other collaborative systems can align or diverge in their basic conceptual understanding of the systems that they participate in, and of the strategies that they should best follow in them.

I am going to conclude this series, at least for now with a final installment in which I will focus on alignment and divergence in what participating businesses seek to achieve in business-to-business collaborations, and in how they would pursue their perhaps diverging goals. And to return this overall discussion to a tight focus on vertical, and I add horizontal integration, as carried out in-house, I will discuss the risk and benefits issues of alternatively working with other businesses or going it alone and seeking to do as much as possible in-house. And as with much of this series, I will consider Apple Inc. and its decisions and actions as a case study example for that.

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. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

Rethinking national security in a post-2016 US presidential election context: conflict and cyber-conflict in an age of social media 1

Posted in business and convergent technologies, social networking and business by Timothy Platt on May 12, 2017

We all face two fundamental challenges: two fundamental limitations in our thinking about risk and how to respond to it, and I am not sure which is more problematical:

• We can and all too often do, get so caught up in our standard routines, that we fail to pick up on and see what in retrospect were even clear warnings of new and emerging risks and threat vectors faced from routinely, automatically following them, and
• We can and all too often do overestimate both the range and reach of whatever security and risk management systems that we have in place now, and the range, reach and effectiveness of any newest and best add-on security solutions that we do institute.
• And that second presumption just starts with our tacitly assuming, for example, that if we have just uploaded the newest update patch to our anti-viral and anti-malware software in place, then our computers and networked systems must be essentially completely secure from those types of threat now, as if new and locally known but yet to be exploited zero-day vulnerabilities were now impossible. That second presumption can and all too often does find its way into all of our information systems security thinking, as an at-least starting point default that we have to continually watch out for and challenge.
• The two challenges noted in the first two of these bullet points in fact represent different sides to a single overall security risk phenomenon, and it is one that is much more wide-reaching than would just be encompassed in my simple if commonly familiar anti-virus/anti-malware example. And those two challenges comprise differing sides to that one larger source of risk that can and do interact with each other and build upon each other with an ongoing toxic synergy.

Let’s think past the walls and blinders that this synergy can and does create for us, and in more open-ended and general terms. What do we currently actually face? We might know, for example, of ongoing online problems such as social media troll behavior (see, for example Trolls and Other Antisocial, Disruptive and Divisive Social Networkers – Part 1 and its Part 2 continuation, and Cyber-Bullies, Cyber-Stalkers, Trolls and the Individual Social Networker.) And we might know of ongoing problems that we face societally such as how our online potentially-globally connecting community has been effectively shattered into separate epistemic bubble-limited groups and demographics, each with their own accepted “news” and opinion sharing sources and their own echo chamber validation of all that is known and presumed within them, and with no outside alternatives allowed in (see for example Thinking Through the Words We Use in Our Political Monologs .) And by now everyone should know about computer hacking and how sensitive and confidential information that is surreptitiously stolen from a targeted computer system can be publically posted online and through social media and related channels to cause explicit targeted damage, through resources such as Twitter and through sites such as WikiLeaks. But we do not necessarily connect the potentially connectable dots that emerging problems such as these create, to see how they and a constellation of other closely-related, weaponizable options could be used together to launch and carry out new far-reaching forms of unified cyber-attack, and against a business or organization, or even against an entire nation.

Note that when I wrote my above-cited 2010 cyber-trolling related postings, I explicitly did so in terms of individual online behavior, and in terms of what were for the most part still just lone individuals acting on their own initiative and in pursuit of their own personal agendas. That side to this challenge, of course still happens. But now the disruptive potential inherent in that once more localized and impact-limited form of antisocial behavior, has been weaponized as a key element for launching closely coordinated, targeted attacks too, with networks of trolls working together in a systematic centrally organized manner.

Think of this as scaling up the dark side to online social media for use in cyber-attacks, exactly as taking over veritable armies of individual, otherwise unrelated and geographically dispersed personal computers in assembling malware-controlled botnets can be used in launching attacks against even the largest organizational networked computer systems. And that quantitative shift on the trolling behavior side of this, makes troll behavior and related, a qualitatively new threat element too, just as coordinately suborning control over distant personal computers through assembly of organized botnets, made that a qualitatively new threat – and a qualitatively new weapon too.

And if new arises when the nature and scale of single specific potential cyber-vulnerabilities and cyber-threats such as these are scaled up individually, it also arises as at least initially, seemingly disparate and unrelated attack options and supportive circumstances for them (such as the ones noted above) are brought together and coordinately organized as new overall tools for new forms of potential cyber-warfare.

Let me add a third fundamental challenge, and limitation on our part to the above two that I began this posting with:

• Regardless of how many times we have stumbled for doing so, we all tend to prepare for the last battle faced and fought: the last war that we had to deal with and its learning curves, and not for the one that might be coming towards us.

I wrote a series to this blog beginning in September 2010 that focused on targeted malware, and with the stuxnet computer worm offered as an at least initial poster child example of that, that I built a more comprehensive discussion around. See Ubiquitous Computing and Communications – everywhere all the time, and its postings 58 and loosely following for Parts 1-15 of that series, and particularly see its Part 3: Stuxnet and the Democratization of Warfare.) We are all still thinking and planning in large part in terms of malware and target-specific malware as exemplified by stuxnet as a then game changing example. And we all think in terms of big systems attacks, such as large-scale botnet-driven dedicated denial of service (DDoS) attacks on business and government network servers and server farms. Those are still ongoing concerns, as are a great many other older sources of vulnerability that we should be more effectively managing, and limiting for their effectiveness against our networked systems. But the next big cyber-attack faced, and certainly any next such attack that rises to a level of impact so as to qualify as an act of cyber-warfare, is going to be led by and even build around weaponized use of social media and the interactive online, and other new and related, still just emerging threat vectors.

I have written repeatedly in this blog about how we do not learn from threats already faced and certainly when they have only been carried out somewhere else and against someone else, when updating and safeguarding our own computers and networked systems. I recently addressed that issue here in the new and still just emerging context of our still embryonic and forming internet of things, in Rethinking online security in an age of the internet of things: the more things change, the more they stay the same.

And this brings me to two areas of discussion that I have been leading up to in this posting:

• Russia’s recent forays into election interference through cyber-attack and both in the United States and in Europe, and
• A generally stated reframing of the overall cyber-security threat theatre faced and its dynamics, that would include within it an awareness of new and disruptive threat possibilities and influencers such as the ones I have just touched upon here.

I am going to continue this discussion in a next series installment where I will delve into those issues, starting with Russia’s recent interference in the 2016 United States elections, and on Great Britain’s Brexit vote and in recent European elections.

Meanwhile, you can find this and related postings and series at Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation. And you can also find this and related material at Social Networking and Business 2, and also see that directory’s Page 1.

Meshing innovation, product development and production, marketing and sales as a virtuous cycle 4

Posted in business and convergent technologies, strategy and planning by Timothy Platt on April 30, 2017

This is my fourth installment to a series in which I reconsider cosmetic and innovative change as they impact upon and even fundamentally shape the product design and development, manufacturing, marketing, distribution and sales cycle, and from both the producer and consumer perspectives (see Ubiquitous Computing and Communications – everywhere all the time 2, postings 342 and loosely following for Parts 1-3.)

My goal for this posting is to explicitly discuss virtuous business development cycles and their vicious cycle counterparts, and I begin this by noting that I have already begun doing so, by way of two specific working examples:

• A more positive, proactively planned and carried out example as drawn from garment manufacturing, where more expensive metal zippers are replaced with less expensive plastic ones (see Part 2), and
• A reactively and at most shortest-term, short term planned negative example that I have come to refer to as the restaurant death spiral, as I explained when presenting this scenario in Part 3.

Let’s begin this by playing what-if in reconsidering those two working examples, starting with the one that I presented in its more positive light: the manufacturing decision to switch from using a more expensive metal zipper to a less expensive plastic one.

First of all, I note here that when manufacturers take steps like this, they often approach this possibility with a goal of effecting change throughout their materials selection and manufacturing process systems, and not for just one decision point such as selection of zippers to include in their finished products. And they start that analytical, decision making process at the points in their design and manufacturing systems where they can predictably affect the greatest savings, at the lowest quality control risk: maximizing the positives while minimizing any negatives there. So in the case study example examined in Part 2 and under reconsideration here, this manufacturer would have done their homework before investing in or entering into this type of specific change so they would know in advance, basic details such as:

• How well these newer plastic zippers work,
• How long they last,
• How easily they break and certainly in comparison to the metal ones that they have been offering,
• And if and how customers accept them,
• Where the answers to the sets of questions that the above points raise would vary depending on where these zippers would be sourced from.

That last point highlights what in most cases would be the ultimate due diligence decision making criterion, where at least one source would have to be able to provide acceptable answers to those questions for a potentially purchasing manufacturer to proceed here in making this materials-used change.

Some third party providers would offer better quality plastic zippers than others and some would offer lower priced ones, and the trade-offs between quality and cost would be crucially important in all of this. But this only reflects two of a larger set of important issues here, and certainly as framed by the first four points here. The answers to the questions raised by the above bullet points and to others that would have to be asked, would vary from source to source for these pre-manufactured parts. And deciding where to source these items, would involve making trade-off decisions for what might be directly competing considerations such as per-unit cost of purchase, versus durability. And with that noted, I turn back to more fully examine the fourth bullet point from above, and the customer’s perspective on this.

That means durability and how long these zippers last before breaking but it also means ease of use by a garment wearing customer. Do they jam too easily, and even if they come through any effort to jerk them open again or closed without breaking? A finding that the zippers might be cheap and durable, but that they tend to jam when used and with unacceptably high frequency would not be a positive here. Quality, ultimately, is determined by the end user customer and not just by the manufacturer as for example when considering issues such as ease and cost of putting these zippers into garments on their assembly lines.

Ultimately, if the customer is dissatisfied with the zipper on a new jacket they have just purchased, they are going to be dissatisfied with the garment as whole and probably with its manufacturer too as a whole. But if they are satisfied with this change they are unlikely to even really notice it at all. So there is a real asymmetry of impact here. Risk analysis and quality control evaluation and follow through would focus on the more impact expanding possibilities of, in this example new plastic zipper failure and on the overall potential costs that this could lead to. So here, and particularly when this is a manufacturer that seeks to offer quality: not just cheap knock-offs, higher quality and a more modest per-item savings in manufacturing might win out. And it probably should.

But let’s play what-if here. Let’s assume, and I will be a bit cynical here, that a third party provider sent a specially selected lot of zippers to this manufacturer for trial use when they knew that they were being evaluated for a possible large and long-term contract with them. And now that this manufacturer has signed this contract with them, they just ship them whatever comes off of their assembly line for the make, model and size zippers ordered – and with less quality control added in for any given batch: no pre-shipping extra-step screening for possible defects or other problems.

• Did this garment maker do their homework, checking to see what other garment makers have experienced when sourcing zippers from this company for use in their products? Or did they make their decisions to buy from this source essentially entirely on the basis of their own reviews of a sample lot shipped to them?
• And let’s consider that contractual agreement. How does it cover quality control issues and for terms of payment, requirement for replacement of items found to be problematical, and contract termination if quality control issues from this source reach a level of significance? That last detail is the one that will come back to haunt this garment manufacturer if anything does, and certainly if they have entered into an agreement to buy at least some minimum volume of zippers from this sourcing business to among other things cover their claimed costs of setting up a production line for that work.
• Who actually wrote the terms defining what would qualify as a contract breech defining loss of quality control here, and what does it say? Does it favor the zipper manufacturer here, or the garment manufacturer that would purchase these items from them, or both and if so in what way? Assume that it would be impossible to prove that the zipper manufacturer knowingly sent a highly unrepresentative sample of their product offerings for trial use, where that in and of itself would qualify as a deceptive business practice that would nullify most such contracts. Assume that any binding resolutions made would be based on the terms of this contract itself as if entered into in good faith by all involved parties.

Proactive only works here if the right details and considerations are in fact all proactively considered. And as soon as a significant one arises that was not addressed in advance of contract signing, everything becomes as reactive and after the fact for this scenario too, as was outlined in my more negative working example, restaurant death spiral case.

Now let’s reconsider that example too. And let’s start out with a detail that on the face of it sounds crazy, but that I have in fact seen done. A restaurant buys canned goods and even when local seasonally grown fresh produce alternatives are available, because no one there has the time or expertise to go to the wholesale markets or directly to the local growers to source that way. They start out as a modestly consistently profitable business doing this! And then they get into trouble and in this case the owner decides that they have to make the sweat equity and learning curve investment of cutting costs (and improving quality) by at least seasonally buying locally and using fresh where they can. This changes everything; their cost cutting is now being carried out at least in part with an intense awareness of ongoing quality and as a matter of reducing cash flow challenges to the business by accepting greater owner burdens – but ones that would in fact improve the restaurant. I have just reframed this away from being a death spiral scenario per se and certainly if this type of more positive change predominates in what is done overall and if this approach is expanded in a next redevelopment cycle.

I have reframed this example from simply representing a death spiral scenario and certainly if more positive changes predominate in their overall impact over more negative ones, and particularly in the eyes of their customers and potential customers in their reachable marketplace. And this brings me to a second foundationally important point that I would make here:

• If the difference between these two basic scenarios and approaches discussed here lies in thinking through and examining the right details and factors and proactively getting them right,
• It also plays out in considering all of these factors in the larger context and for how everything fits together – and in how this larger perspective impacts upon the customers who ultimately pay the bills and who would or world not contribute to keeping the business viable and successful.
• This is a point where the garment manufacturer and the restaurant, and essentially any product providing business face essentially the same challenges and issues.

And this is where virtuous and vicious cycles enter this narrative. Both take place as cycles: and with at least two and probably many more rounds of proactive where possible, and reactive where necessary action and reaction.

• Virtuous cycles positively build on successes achieved and on how they were arrived at, and
• Vicious cycles seek to endure where viable paths to positive business building do not seem to present themselves, at least at acceptable costs to the business owners.

To follow-up here on my second example from Part 3, if the owner of restaurant realizes and accepts that they are going to have to step way outside of their usual comfort zone to identify and reach out to local farmers in their area, to buy local produce from them and enter into supply chain agreements with them for continuity of supply, they are creating a foundation for what can become a very positive virtuous cycle. And if they couple this first change with a shift to a seasonal menu where they can always offer best-price, best quality and as locally as possible, they might find whole new types and levels of business success from that. But if they are never willing to take that first step – here let’s say with sourcing and buying local spring and summer produce, none of this potential good can happen.

• Ultimately, the difference between virtuous and vicious here is in the details, with larger positive or negative patterns emerging from the perhaps individually small decisions made, actions taken and commitments made, or not.
• And ultimately, a business owner can decide which of these two paths to take, simply by virtue of whether they are willing to step outside of their comfort zones and attempt what for them at least, would be their new and still at first unknown.

I am going to continue this discussion in a next installment where I will more explicitly consider paths of change, and in both their gradual and disruptively intrusive forms. And in anticipation of that, this means building for agility and resiliency. In anticipation of that narrative, consider the potential consequences of weather-related crop failure for the virtuous cycle restaurant owner of above, who has sought to develop their newly reframed business in buy-local terms and with that as a defining feature of who they are now as a restaurant.

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. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

Innovation, disruptive innovation and market volatility 32: innovative business development and the tools that drive it 2

Posted in business and convergent technologies, macroeconomics by Timothy Platt on April 20, 2017

This is my 32nd 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 6-31.)

I have been developing what amounts to a case study example in recent installments to this series, and I add in a concurrently running second series: Intentional Management (as can be found at Business Strategy and Operations – 3 and its Page 4 continuation, postings 472 and loosely following. And see in particular that series’ Part 30.) And this case study takes the form of a discussion and analysis of a new approach to business process flow analysis, and to business systems management that I offer here in this blog as a new source of value for improving business modeling and strategic planning, and that would be both hardware and software dependent for its implementation. The hardware called for would be largely off the shelf, but as primarily marketed and sold to very different, non-business market audiences. And much of the underlying software required would be off the shelf in nature too – reducing costs of development among other considerations – but at a cost of increasing resistance to earlier more mainstream use and to acceptance into business practices from its novelty of source too. I discussed by way of comparison, the historical case study example in Part 30, of how businesses were reluctant at best to adapt easier to use graphical user interface computers in their offices, and in large part because of a non-business image that they brought with them. In that, the advent of the graphical user interface approach, represents a case study example of a more general phenomenon that I would argue likely to arise here too, that also fits into our general understanding as to how new innovation and invention diffuse out into general acceptance and use.

I have been discussing the business modeling and imaging innovation case study example of this series, in terms of innovation and disruptive innovation per se and in terms of how the products of change diffuse into and with time throughout consumer, end user-oriented markets and from initial pioneer and early adaptor acceptance outward towards being generally and routinely accepted, and even by late and last adaptor market segments.

The business visualization innovation that I have been developing and presenting here, can in large part be viewed as a resource that would offer increased information availability to business planners and strategists, and for improving overall operational systems – and exception handling contingencies as well if effectively implemented. My focus in this installment is to step away from the specifics of that case study example to consider information flow and availability, and business systems friction in the organization in general, and to discuss the boundaries between and the distinctions between innovation per se and disruptive innovation per se – and from an information flow and accessibility perspective. And I begin by asserting a fundamentally important set of points:

1. Innovation and its realization are information and knowledge driven.
2. And the availability and effective use of raw information and of more processed knowledge developed from it, coupled with an ability to look beyond the usual blinders of how that information and knowledge would be more routinely viewed and understood, to see wider possibilities inherent in it,
3. Make innovation and its practical realization possible and actively drive them.

That much is obvious, and should not come across as being particularly new or innovative. But as a next, and I add crucial next step to that progression of thought, I add two more details here:

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.

And it is the last two of these now five points that I will focus on here, building towards a fuller discussion of them in terms laid out in the first three.

Information and knowledge drive innovation, and set the boundaries between innovation per se and disruptive innovation, and certainly as value creating possibilities. And yes, this does mean that the boundary between “simple” innovation that might even just represent a more slow-paced next step of evolutionary change, and disruptive innovation, has a gray area between their more usually considered extremes. Understanding and thinking and developing in terms of that gray area can be leveraged as a capability for making a business, or any innovative effort more effectively innovative and less bound by small and even just cosmetic change.

This all begins with raw data and how it is organized and developed in producing what should be usable, actionable processed knowledge. And this all begins with the questions, issues and challenges of bringing what in fact would be the essential basic information that can be made available, together. And it begins with making this available to the people who would most need it and who could best use it. And that compelling need for more open sharing and for collaborative information value creation, has to take place within the constraints of necessary and even legally mandated information flow restriction and the barriers to free information flow that any real world business has to face, and function within. I have just outlined a few of the highlights of what in practice would become a more extensive process-driven system, and one requiring management and oversight and one that would require ongoing review and change. And I posit all of this as fitting reasonably into a single “and it begins with” as phrased above in this paragraph, as capacity to effectively innovate demands effective basic information access as one of its initial foundational requirements – and certainly if innovations that would be pursued are going to be oriented from the start towards more effectively supporting and enhancing the business that they would be developed in, and if those innovations are to be supportive of ongoing value creating, value center business activities.

Let’s consider this from an operational, rules based information access and use policy perspective and with the absolute basics and with a basic conundrum that actually developing and implementing this type of policy actually entails:

• Effective information access control is a necessary fact of life for any business or organization that gathers in, stores, or uses any information that it might be required to maintain as confidential, and for either internal to the business reasons or to meet outside legal or other regulatory requirements. And this means identifying and classifying both potential information sources and potential information recipients in risk management terms, as to what information they can categorically be allowed access to, and as to whom they could share this information with.
• Database and other storage systems, and channels of information sharing, and of information flow monitoring, and policies and practices for deleting information that should no longer be held: the functional, structural systems in place for carrying out the storage and transmission of this information flow, would all be developed so as to more effectively enable approved information management at the level of the above bullet point while at least ideally preventing unapproved, ad hoc information sharing, and I add local user storage of information that the rules based system in place and its underlying business model thinking would not approve.
• But, and this is where the conundrum of this narrative enters in, when barriers are created in the assembly, storage and sharing of information, that information becomes fragmented and in ways that limit the capability of any one potential user or any group of them as they would create actionable knowledge out of it. The more that the basic information available is partitioned and fragmented, and the more locally known-only, the actionable knowledge can be that is derived from it, the greater the business systems friction there is going to be that would hinder the development of new and less routine knowledge out of it.
• Information access partitioning leads to reduced risk management challenge and certainly in shorter time frames. But it can also actively hinder and even prevent innovative insight, by preventing that information and knowledge from being reconnected in new and potentially valuable unexpected ways. And this creates what can be seen as long-term risk management costs – but ones that can be impossible to see except reactively and even just way after the fact, as for example when a lost opportunity comes to light. Consider the all too common a reality of learning that another competing business has just marketed a breakthrough development, where all of the pieces necessary for it were there in-house in your own business – but disconnected from each other and from the people who could have used them, and never developed from as a result.

I have written repeatedly over the years of businesses that have arrived at even profoundly revolutionary innovation that has gone on to found entire new industries, but with those potentially first mover businesses left out of all of that, because they did not or could not organize and capitalize on what they had in-house and what they had paid to develop there. (See, for example, my series: Keeping Innovation Fresh, as can be found at Business Strategy and Operations – 2, as postings 241 and loosely following, and its Part 2 and Part 3 in particular.)

• And this, of course means people in these systems only having access to the precise information and information types that a simple linear business development, business as usual approach would identify as their legitimately needing. This leaves out the perhaps less expected, and the wildcard factor of how innovators reach out beyond their own day-to-day when arriving at new. Think of this as either a second face of the same conundrum as just noted about or as a second separate conundrum in and of itself; these two considerations do work together in toxic synergy, and either way.

I have primarily been addressing the first of the five initial numbered points offered towards the top of this posting here, as a foundation for discussing the next two. I will turn to them, and in terms raised here, in my next series installment. In anticipation of that, I will consider the issues raised here and those of points four and five, from a financials perspective as well as from a more explicitly risk management one. And as part of the overall discussion to follow, I will also discuss process systems complexity and the role of developing lean and agile systems as innovation enablers.

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.

Rethinking vertical integration for the 21st century context 15

Posted in business and convergent technologies, strategy and planning by Timothy Platt on April 18, 2017

This is my 15th installment to a series on what goes into an effectively organized and run, lean and agile business, and how that is changing in the increasingly ubiquitously connected context that all businesses, and that all individuals operate in (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 577 and loosely following for Parts 1-14.)

I focused in Part 14 on symmetrical and asymmetrical relationships as they can and do arise in supply chain and similar business-to-business collaborations. And I couched that discussion for the most part in terms of shorter timeframes, and on how collaboration shaping and accommodating terms arise in a more immediate here-and-now. My goal for this posting is to step back from that to consider longer timeframes and the prospect of both slow evolutionary, and sudden disruptive change. In anticipation of discussion to follow, I will continue from there to more fully discuss the details of symmetrical and asymmetrical collaborative relationships and how they are structured and carried through upon, looking at that from due diligence and risk remediation perspectives and from both sides of the table. But for here and now, I focus on the longer-term as such, and I do so through an at least brief and selective consideration of a very specific case study example:

• The Eastman Kodak Company, as it was when it created and led the market, and globally for easy to use cameras and for amateur photography
• And as its position in this market, and the size and strength of this market as a whole changed out from under it.

Let’s start at the beginning of this narrative arc and with George Eastman’s breakthrough innovation that in effect created the entire industry that his company came to dominate. And in that, I add a telling detail as to their once global reach for home and amateur photography and for a great deal of professional photography too. French: the one true language of France as a nation is one of the most zealously preserved languages on Earth for maintaining purity to its linguistic and cultural roots. There is even an all but revered, at least by many, body of French cultural luminaries, the Académie Française that has as one of its defining roles, the identification of foreignisms and adapted words and their replacement with more allowably French language-grounded alternatives, that would become the only accepted way to speak or write them. I mention this because when Kodak cameras first came out and crossed the Atlantic to find and build markets in Europe, French men and women commonly took to referring to cameras in general as Kodaks; Kodak became their word of common usage for these new devices. And it took a great deal of convincing from the Académie and its supporters to bring their public to use a more acceptably French alternative. They did, but this indicated the hold that Kodak as a company achieved in its new and growing industry.

George Eastman did not invent the camera, any more than Henry Ford invented the car. Both took what had been niche market offerings that only the few could afford or use, and made them into easy to use and inexpensive to own and operate products for mass markets. This, in Eastman’s case was his innovation – or rather his progression of closely interconnected innovations. He and his new company had to design and build cameras that were small enough and compact enough and inexpensive enough for an average man or woman on the street to be able to purchase and use. He had to do this in a way that would eliminate the hands-on technically difficult tasks of loading film into one of those older, pre-Kodak cameras, expose them to create images, and remove and process the resulting exposed firm without loss of the image captured. And he did this at a time when film development still required special dark room facilities and a willingness and ability to work with toxic, and I add noxious smelling chemicals. Kodak cameras were designed and built to eliminate the need for photographers themselves to have to work with those chemicals or carry out any of those still obligatorily complex steps. And he did make those steps easier and more straightforward for the people who would do this. And that meant designing and developing new forms of photographic film, that would be housed in film cartridges that anyone could pop into a camera, use and then remove for development and for the production of finished prints – by someone else. And it meant developing and offering easier to use pre-mixed photographic development chemicals. And Eastman had to develop a system of partner businesses that would do this photographic development work and print out finished products, and with a great deal of that work carried out through local pharmacies, and certainly as points where camera enthusiasts would purchase new rolls of film, and bring them in for development and to pick up their finished photos.

• George Eastman invented the easy to use and inexpensive, mass market camera and made photography a basic activity that anyone could use to record the events and moments of their lives through.
• But at least as importantly and certainly if that more technical half of his endeavor was to succeed, he devised and built an entirely new form of business-to-business collaboration and supply chain system, to address this new area of business possibility.

And cameras – George Eastman’s Kodak cameras became a standard given and for many and globally, and with the French even adapting the name of that company as the categorical name of that device – at least until the Académie Française was finally able to replace that with what they deemed to be a more appropriately French alternative: “la caméra.”

Then time passed and new innovations arose. Kodak became a preeminent source of specialty film such as medical X-ray film. And they supplied the world with a great deal of standard photographic film, as well as well as offering better and better cameras themselves. But patents expired and new competitors came in that undercut them for cost: new competitors that marketed very aggressively and successfully for market share. The Fujifilm Holdings Corporation, often simply referred to as Fuji comes immediately to mind in this context though Kodak and I add Fuji faced stiff competition for film sales from other companies too. And many of these companies also began offering lower cost cameras too.

And then Polaroid came out with its Land camera with its instant development film, and Kodak and their older cameras and film offerings that required outside film development and the built in delays and extra expenses that this entailed, faced an entirely new disruptively innovative challenge.

The original Model 95 Polaroid Land camera that first went to market in November, 1948 was expensive and it primarily appealed to people who were more inclined to be pioneer and early technology adaptors. But as newer and less expensive models and versions of this basic camera design came to market, Polaroid cameras came to capture a large and increasing share of the home and personal camera and photography markets, and particularly for when the greater image resolution and zoom-in magnification available in more standard cameras was not needed. They were easy to use and you got your finished photos in about one minute and all you had to do was to wipe the finished image with a chemical sponge that was provided to stabilize it so it would not fade – at least for several years.

Kodak, and certainly in the 20/20 perspective of hindsight, was not as quick to pick up on this challenge as they could and probably should have been, resting on the laurels of knowing that their cameras and film offered much better and much more long-lasting photographic results. And when digital cameras first came out they fell into essentially that same trap, and certainly at first and when the public was initially coming to define these new cameras in their thinking, and when they first came to see which businesses dominated this new market as its first movers. And the irony in that, is that the first electronic camera ever built, was devised and constructed by an engineer at Kodak: Steven Sasson, in 1975, using charge coupled device technology that was developed and designed there for its specific design features. I wrote an earlier series to this blog that I cite here for its immediate relevance in this context: Keeping Innovation Fresh (which can be found at Business Strategy and Operations – 2, as postings 241 and loosely following for its 16 Parts. I specifically note its Part 2 and Part 3 in this series’ context, where I discuss something of the histories of Xerox PARC and Menlo Park as case study examples of how innovative businesses do and do not actually develop and capitalize on the innovations and inventions that their people and their facilities initially devise. Kodak can be seen as fitting into one of the two basic patterns that were discussed there and certainly for this innovation, where other businesses captured large areas of this new market and much more quickly than a more proactive Kodak would have made possible.

Kodak certainly still exists as a business and it is still actively involved in a significant number of industry segments, offering quality products there. But its initial founding market and industry are now more niche and specialty than mainstream and particularly with an all but ubiquitous use of digital cameras for standard photography and with so many of those cameras coming from other companies and as globally sourced product offerings.

Let’s consider the arc of that narrative from the perspective of this series and this portion of it. Kodak, through the vision and drive if its founder, built itself into an industry defining and creating powerhouse, in large part by creating and I add managing what became a vast and with time globally reaching supply chain and business-to-business collaboration system, with Kodak providing cameras and film and all of the development chemicals that outside businesses would use in developing camera user photos and more, and with those outside film processing developers gaining profits from their participation in this endeavor. As a snapshot in time, this presents a very high point of success and one of asymmetrical business-to-business collaborative control. And Kodak as a company continued to both innovate and diversify in what it did and from those early days on.

Some of those ventures, and I cite what became the Eastman Chemical Company as a working example, began as in-house divisions or other holdings of the Kodak Corporation and were then spun off as separate business entities. Chemical production, to pursue that example, was initially developed as a division of Kodak that was tasked with producing the specific range of chemicals needed for processing and developing their film. But it was ultimately reorganized into a completely separate business from its parent company in 1994.

Maintaining this type of chemical production capability in-house was a natural direction for Kodak to pursue in its growth and development and certainly from early on, given its intensive need for photographic and related chemicals, and its capacity to innovate and develop from there. But with time it became more prudent to bring their overall Kodak business model back into focus and its finances back in line and in this case that meant selling off this venture – and particularly as the market demand for more strictly photographic industry chemicals began to shrink. Meanwhile, this division had actively diversified what it offered in order to keep itself relevant and profitable, with its product offerings coming to include a much wider range of specialty chemicals. So it broke off as a new and separate business with a strong start for success as such.

Some of Kodak’s expansion and diversification initiatives have not worked out as successfully as the now separate Eastman Chemical Company has. But I am writing here of a relatively long corporate history, beginning in August, 1880 in Rochester, New York if you choose to trace this back to George Eastman’s original Eastman Dry Plate Company where he produced his first amateur-usable cameras out of a third floor office and production facility that was located on State Street. Kodak itself was formally founded out of that business on September 4, 1888, also in Rochester and as an expanded continuation of it. And I have been writing in this narrative, of change and of slow and evolutionary change that has not always been recognized, and certainly early on for its potential and even likely impact. And I have been writing of disruptive and innovative change and both as it has arisen in this business under consideration here, and as it has impacted on this company from the outside – and even there without always being appreciated for its significance and certainly not quickly.

• When a new and even groundbreaking disruptive innovation first arises and begins to go to market, its initial buying audience – its original realized marketplace is in many cases going to be small from it primarily attracting a positive response from the smaller number of pioneer and early technology adaptors who would take the risk of investing in and using it.
• It is easy to confuse such a starter market as simply representing a niche market – that might fade away or might remain stably strong – but only for a niche consumer audience.
• I end this posting by posing an unfair and essentially impossible to always consistently avoid conundrum: that of discerning early on enough when a new innovation is only starting small and with an initial pioneer and early adaptor market that it will grow beyond, and when it is in fact more destined to start as and remain a more narrowly defined niche market offering that will never really grow all that much in the business opportunity that it offers.

Kodak, like many and even most long lasting and storied businesses, has seen and chosen wisely in this, on a number of occasions and certainly during its founding. And from the vantage of 20/20 hindsight, it has seen and understood the meaning of new and innovative in ways that subsequent history would show to have been correct, and often enough to survive and even thrive, but while missing on that on significant occasions too.

I am going to continue this discussion in a next series installment as indicated above towards the top of this one where I stated that I will “discuss the details of symmetrical and asymmetrical collaborative relationships and how they are structured and carried through upon, looking at that from due diligence and risk remediation perspectives and from both sides of the table.” 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. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

Rethinking online security in an age of the internet of things: the more things change, the more they stay the same

Posted in business and convergent technologies by Timothy Platt on March 23, 2017

I have written on a number of occasions in this blog about computer systems and online security, and add that they have been areas of attention in my consulting business, and in pro bono work that I have done concerning critical national infrastructure and related areas of interest. I have not addressed this complex of issues, and certainly not systematically, for a while now in this blog. But I find myself returning to this general topic area here, in response to a growing and increasingly important disruptive change in what constitutes prevalent and emerging system vulnerabilities: risk vectors that are becoming increasingly important for both individual businesses and organizations and when considering the security of overall national infrastructures. And I begin this return to this topic area by noting what in this context might best be considered an unfortunate truth: the more things change, the more they stay the same.

The Open Web Application Security Project (OWASP) is a global leader in developing and openly sharing free and open source software security management and improvement resources. It is a world-wide not-for-profit enterprise that seeks to create and offer a meaningful part of the overall solution for combating and blocking malicious hacking as is carried out on and through the web sites and other legitimate online presence of businesses and organizations everywhere. And theirs must at times seem to be a losing battle, and even as they keep updating the tools and resources that they develop and offer, and even as they actively reach out to educate and inform.

One of OWASP’s key resources is their Top 10 List of most pressingly important, commonly encountered vulnerabilities that are exploited in attacks, which they recurringly update to reflect at least close to current primary risks and vulnerabilities faced. And if you look at their newest completed version of this list, available online as of this writing, side by side with their 2010 list (with both available as a free: PDF download here) you see essentially everything on the newer list is still there from the older. Six of the ten entries listed are unchanged and others in the more updated version are more reorganized from the old than anything else. To clarify that last point, looking at one of their reorganizational changes in what is now included, and of particular note here in this posting, was the creation of a new more broadly identified top 10 risk category of “using known vulnerable components” as one of the changes and updates actually made.

That is perhaps as good a general label for most all of their list as any, and particularly when such hauntingly familiar villains such as SQL injection vulnerabilities to data-driven applications (such as online forms) have both remained on their list and at its top for a long, long time now, as a separate risk vector entry in and of itself. The more things change, the more they stay the same, and many of the most recent Top 10 entries that we see there now in fact trace back in their basic forms to the first version of this list that was originally released.

And that brings me to the new and to change, and from there right back to the “stays the same” of all of this. The excitingly, disruptively new that I would cite here is our much fan-faired growing new internet of things. The underlying dream and goal of this is to leverage an increasingly open ended range of objects, tools, devises and items with smart technologies and with online connectivity so their capabilities can be expanded and both individually and synergistically. This can mean smart online connected thermostats that a home or business owner can set and reset from anywhere at any time, or an appliance that can tell you if it is developing a problem that might need repair or maintenance. It, on a vast numerical scale that definitely offers synergistic value, can mean smart tagged packages in transit that can in effect track their own current positions themselves, and with all of that data feeding into smart, artificial intelligence enabled big data systems – that can be used both to monitor individual deliveries, and monitor and optimize entire delivery systems for trucking and other transport resource use. These systems and the raw data and processed knowledge that can come from it, can enable development of more effective storage facilities used in transit and for better evolving shipping and transport systems overall, to meet changing customer and systems needs.

I have not even scratched the surface here, of the potential positive side to developing and implementing a wide-ranging and even pervasive internet of things. Public health and safety, and an increasing range of other basic areas of involvement here could also be cited. Of course this means the overall scale of the internet for the number of nodes connected and connectable into it, growing from the few billions that it has become, pre-internet of things, into the trillions. In that, a goal would be the creation of an intelligently connected and intercommunicating world, and that could be considered a major benchmark accomplishment of the 21st century and certainly as it is currently developing. That is the change and the new and the positive side of that. Now what about the “more of the same”, and in this case the realizable negative more of the same in that?

Let me begin addressing that question by offering a brief and highly selective historical note as a starting point. There are, of course a number of potential villains in this narrative that I could cite here, but I select one out of that larger and more diverse cohort for consideration because a clear record of involvement and activity was developed from early on in this story concerning them. I begin with the fall of the old Soviet Union and the break-up and reorganization of its old state security apparatus, and of the old Komitet gosudarstvennoy bezopasnosti (KGB) in particular.

When the Soviet Union formally and officially ended on December 26, 1991, their old KGB began a reorganization under a new name, becoming the new Federal’naya sluzhba bezopasnosti Rossiyskoy Federatsii (FSB): their Federal Security Service of the Russian Federation. True, a significant number of now former KGB employees were pensioned off or otherwise let go, and life after the fall of communism there was not always easy for them. But a real effort was made to retain the skilled and experienced people who had worked for the old service as many had capabilities that would, or at least might be needed again.

The old Warsaw Pact collapsed two years earlier in 1989, and Russia’s Eastern European nation buffer block, protectively separating them from the West of Europe, broke away. The peoples of these nations overthrew and ended their Russian-led communist governments in efforts at democratic reform. And perhaps most importantly to this narrative, matters did not go as smoothly as they would in Russia itself, for the now former employees of those nations’ counterparts to the Russian KGB. The new nations that were now being founded out of the rubble of their communist pasts were all at least relatively impoverished, and “their” old national security agencies, long viewed as Russian weapons aimed at their own people, were not for the most part reorganized and certainly not as Russia attempted with theirs – at least in part after witnessing the consequences of this in the now former Warsaw Pact buffer states. There were mass lay-offs from their now defunct KGB’s, and many of these professionals with their more specialized covert experience and training could not simply start looking for more open civilian work – and even when it might be available.

One of the sister agencies of particular note here in this regard is the old and I have to add much despised Romanian Departamentul Securității Statului (Department of State Security) or Securitate: the old Romanian KGB as it was sometimes referred to in the West. East Germany, Poland and all of the other Eastern European vassal state members of the Warsaw Pact had their own counterparts to this organization and like it they were led to a very significant degree by Russian KGB “advisors.” The Romanian KGB: the Securitate as it was most commonly called in Romania played a very special role in this overall system.

The Securitate was used for carrying out tasks and assignments that the Russian KGB itself would not want to be associated with. They were used as a tool of plausible deniability in the face of news reporting and of possible foreign government disclosures, and for both carrying out acts of extreme violence and extreme coercion. And many of those people were simply let go when the old communist government of Nicolae Ceausescu was overthrown, forcing him to leave their capital, Bucharest on December 22, 1989. The fall of the old communist regime there, was by far the bloodiest and most violent in the downfall of any of the old communist Eastern Bloc countries. And many if not most Romanians came to see that as coming from now suddenly former members of the old Securitate, shooting civilians as snipers, among other last-stand efforts to retain some measure of control. Soldiers of the Romanian Army finally had to move in to stop them. Former Romanian KGB: former members of the Securitate were for the most part tossed out in the streets, and with little if any future in any emerging private sector business world or economy that might emerge; they were pariahs. This definitely included people who were skilled in what are euphemistically referred to as social engineering skills and related and a fairly significant fraction of those people moved into crime as their one available next career path possibility.

When the internet opened up and particularly with the advent of the World Wide Web, these now experienced criminals began exploiting their skills in this new arena too – and they created what became an entire Russian and Eastern European industry, with a great deal of that home based in Romania itself.

The first botnet that has been definitely identified and dated was created by a student at Cornell named Robert Morris (see How the First Botnet Changed the Internet Forever.) Morris did not build or launch this computer worm with malicious intent. He has always contended that he was only trying to find a way to gauge the size of the internet and that he did not expect it to do anything that could in any way disrupt the information traffic flow there. But it did and one of the early groups to pick up on the potential of this were those now very former (by job title) old Romanian Securitate agents. And they began assembling their own botnets by conning people (using their social engineering skills) into loading malware into larger and progressively larger numbers of home and business computers, that were not adequately safeguarded with anti-malware protection (virus, worm, and related blocker capabilities – and even for what was then all but freely available protective software.) They used their seeming myriad copies of those unwittingly installed malware programs to surreptitiously use the individually contributions of all of the computers they had hijacked through them, together. And they used them to launch targeted denial of service attacks (DoS attacks) against specific individual businesses and organizations. Then they asked for and received ransom to stop, as well as payment from third parties that wanted to disrupt their competition and their enemies. This took on political aspects too, as those third party payers and sometimes the hackers themselves chose to use these weapons for more than just simple commercial purposes.

I do not know when the first genuinely criminal DoS attack took place and I suspect that no one actually does. One of the reasons why the same old vulnerabilities keep showing up and keep being exploited and all too often in the same way, as exemplified by their persistence on the OWASP Top 10 List, is that victims of cyber attacks have historically, all too often remained silent about what happened. They have not even wanted to admit that anything did happen if they could prevent that from getting out. The why of this is very simple. A loss of trust on the part of their customers and of others in their communities (e.g. their suppliers and others) was and still often is seen as holding greater potential for loss than any such attack itself, and with that cost simply added onto the costs and losses already faced from an attack itself. But it is certain that the people I write of here, began carrying out their own DoS attacks using botnets they had assembled – or that they rented at least in part from colleagues, and early on in their new post- Securitate careers.

The DoS attack as a means of exploiting computer systems and network vulnerabilities, is at least as old as essentially any of the Top 10 entries on the OWASP list. And computer systems: server farms and their supportive networking systems, have become more and more robust in being able to block and where necessary out-bandwidth at least most such attacks, or at least recover from them relatively quickly. This is of course an arms race, driven in large part by the fact that so many regular desktop and laptop and tablet computers do not have anything like adequate up to date malware blocking software on them and even now – and with smart phones entering that picture too. But it has been a race. And this, finally, brings me directly to the exploding in scale, internet of things – where virtually all of these new nodes and types of nodes that are now going online seem to be vulnerable to exploitation from their unwitting inclusion in botnets. That certainly is the fear that many in internet security face in all of this.

I have, of course, only cited one group of black hat hacker participants in this narrative, and with both wider private sector criminal and even direct government agency involvement coming to participate in this too – and certainly at the proof of principle and systems capability level for governments, as a source of offensive capability in their cyber-defense systems if nothing else. Expand this story as offered here in your thinking in multiple directions and globally and you have an idea of what this new variation on “the more things change, the more they stay the same” actually means.

I end this posting by taking the here and now of it out of the abstract, with three references to news pieces on real-world DoS attack capabilities that have already appeared in the wild – outside of any software security research lab, that specifically target the internet of things and its ever-increasing range of potential botnet nodes:

Double-dip Internet-of-Things Botnet Attack Felt Across the Internet,
Internet of Things Believed to Be Targeted in Massive DDoS Attacks and
DDoS Attack Shows Dangers of IoT ‘Running Rampant’.

We are currently just witnessing the dawn of this cycle of change, with its variations of new and stays the same. And I offer this posting as a cautionary note as to the importance of leveraging what we have learned from our more familiar computer and smart (human used) device internet, to better and more proactively safeguard our emerging internet of things too – and with the development and wider-spread dissemination and use of new safeguard tools and approaches too, as need for them arise in this emerging cyber security context.

I am certain to return to this topic in future postings. Meanwhile, you can find it and related postings and series at Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

Meshing innovation, product development and production, marketing and sales as a virtuous cycle 3

Posted in business and convergent technologies, strategy and planning by Timothy Platt on February 27, 2017

This is my third installment to a series in which I reconsider cosmetic and innovative change as they impact upon and even fundamentally shape the product design and development, manufacturing, marketing, distribution and sales cycle, and from both the producer and consumer perspectives (see Part 1 and Part 2.)

I focused in Parts 1 and 2, on a case study example drawn from garment manufacturing in which I explored a set of issues that arise as consumers and product end users see change and innovation differently – and what constitutes significant change or innovation at all. And in that case I focused on a change that for many consumers would not even rise to the level of notable enough visibility to qualify as a meaningful cosmetic change – but that would have innovative change levels of consequences for manufacturers and certainly in their supply chain and parts sourcing, and in how they run their manufacturing lines. I chose a change that manufacturers would want to enter into and embrace because it would lower their production costs and help them remain profitable in an industry that is very competitive for being able to offer the same quality of goods at the lowest possible price points. But at the same time those manufacturers would want this change in what they put into their garments and in what that costs them, to be essentially inconsequential to and even invisible to the consumer and user: their ultimate customer.

I raised the issue of quality control for this change, and the issue of finding and vetting sources of these less expensive- to-manufacturing parts, in Part 2. And in that context, I noted and expanded on the fact that the specific change that I wrote of there, would in most cases only visibly come to the consumer’s attention of it failed to work, or if it broke down and came to so fail too quickly and too easily. The novel, lower cost per unit item change I focused on there was the switch from metal to plastic zippers – not for all garment manufacturers but for a significant segment of them. And in that case, robustness and reliability meant essential invisibility to the consumer – and as a, if not the desired goal for the manufacturer in this, where they could simply pocket their per-garment produced savings and focus their attention and efforts towards new challenges and opportunities.

I turn here, as noted at the end of Part 2, to consider a very different change scenario, intentionally entered into by a business: and it is one that I have come to think of as the “restaurant death spiral” scenario. This scenario in fact has its direct counterparts in other industries, but I first became explicitly aware of it in this context so the restaurant-oriented name for it has stick in my mind for it, as the poster child example of how it can arise. And I address it here in that context.

I will as just stated delve into this scenario here, but to set the stage for it, I offer a further thought on my first, garment industry example first:

• A switch in manufacturing of the type exemplified by my metal zipper to plastic zipper example is one that would be taken very strategically and with long-term thought out plans as to how this would enhance the business and its financial strength, and its competitive position. This is a proactive change and one that would be taken with all of the pre-planning and follow through evaluations that that implies and entails.
• My restaurant example, as I will address it here, is essentially entirely reactive and when a business pursues this type of path, they do so from a short-term, survive-now perspective – and without longer-term strategic consideration of possible or even likely longer term consequences.

What is the restaurant death spiral? It is a phenomenon that I have seen play out quite a few times now and particularly for restaurants that have succeeded, at least modestly but over a period of time. And then the neighborhood changes or they find themselves facing new competition that is drawing away at least a significant fraction of what used to be their repeat-business trade. There are other reasons that can set a business up for this, but the bottom line consequence of all of them is that a restaurant that used to be steadily if perhaps just modestly successful and profit generating, finds itself falling into the red – at least modestly and certainly for what have become its “slow” months – and with prospects of that shift continuing and becoming worse.

• So the owner takes a look at their menu and at what they offer, and at what it actually costs to produce what of that. And they look for places where they can save money from spoilage by for example preparing in advance and freezing meal portions – but without necessarily bringing in the equipment needed to seal those packages airtight, and without necessarily setting up freezer space to limit up and down swings in temperature for food stored there, when their staff has to go in and out of their freezer storage unit all day long.
• And setting aside the issues of freezing servings to reduce spoilage waste and the like, let’s consider some of the other types of decisions that an owner might make under these circumstances. And obvious one is to drop menu items that bring lower profit margins. And another is to “simplify” – simplify and cheapen the list of ingredients that go into menu items offered and sold. Portion sizes can be reduced. And increased emphasis can be placed on building up the areas of the business that do in fact bring in larger profit margins per serving – where a restaurant bar can be their biggest profit center – and certainly on a per sale basis. So they try to sell more beer, wine and hard liquor (assuming of course they have a full product line liquor license when I include all of that here.)
• And they find that their patrons come into their restaurant dining room primarily for the food offered – even if they order from the bar while doing so. Very few go into a restaurant, as opposed to a bar-first establishment that also sells bar food, for the drinks. They order meals and then order drinks accordingly.
• This is a spiral I am referring to, so to continue this narrative. The first month, let’s say, that the business does this, they see basically the same levels of business – and they save a bit from their cost cutting. This adds to their bottom line. But at least a few of those customers leave after having their meal a bit dissatisfied, and it doesn’t matter if this is because a dish they have always liked is not being offered now, or the dish they get doesn’t seem to be as good as it used to be, or because it is notably smaller or what. The change might be in headcount reduction in the kitchen or serving staff too – with that edge of dissatisfaction coming from slower or lower quality service too – and with challenges like meals arriving at the customer table over-cooked from having spent too much time under a heat lamp waiting to be served. The only important point here is that regardless of what change stands out to the customer, they leave feeling they did not get their money’s worth. And this reduces the chances that they will go back there, and certainly as often. And they might tell friends about this change too.
• Basically, the second loop around this spiral is a repetition of the first – but at a lower level down for restaurant performance and with a next cost-savings step taken. I noted a number of possible “savings” approaches that might be taken, at the top of this set of bullet points. Only small such changes and probably just single such changes are taken in any given cycle downward – and certainly at first. I mentioned layoffs in the immediately preceding bullet point; that is likely to be a last-step move unless someone who would probably be let go anyway and with cause, was led to the exit a bit earlier because of profitability problems forcing a hand there.
• Can a restaurant find a way out of this type of downward spiral? Yes, but the key to that is in their owners having a difficult conversation and with themselves if with no one else – where they have to step back from their here and now, admit that their restaurant is in real and deepening trouble – and that it may have to be re-envisioned and reborn,
• And with a new menu – not just a cheapened, corner cutting one,
• Or with a new look,
• Or with a better trained and incentivized staff,
• Or some combination thereof.
• And yes, this can mean rebuilding in ways that capitalize on their ability to cash in on the potential of profit centers like their bar – but once again, if they are first and foremost a restaurant, they need to lead with that, unless of course their business rebirth would mean their turning their venture into a bar or tavern that sells drinks, and that incidentally sells food too. Yes, this scenario is one where a turn around and recover most likely would need at least some change management guidance, and with that starting with a reconsideration of the basic underlying business model too. But my focus here is on the specific scenario touched upon here – and on its restaurants manifestations.

And with that more general framework point raised, my second example here is reactive and with all planning short-term oriented. And the only way out calls for finding a way back to being proactive again and longer-term oriented in thinking and execution.

Think of my garment manufacturing example as an attempt to follow a virtuous cycle pattern in a very competitive industry and marketplace. And think of my restaurant example as one in which a business can fall into a vicious cycle – and one that it is unlikely to survive through long-term if it cannot break out of it. I am going to step back from the specifics of these two scenarios in a next series installment where I will specifically delve into the issues of virtuous and vicious cycles, and knowing what you might be in or entering one of them.

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. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

Innovation, disruptive innovation and market volatility 31: innovative business development and the tools that drive it 1

Posted in business and convergent technologies, macroeconomics by Timothy Platt on February 3, 2017

This is my 31st 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 6-30.)

I recently wrote and posted a thought piece note to this blog, titled When the Tool You Most Compelling Lack is a Hammer, Everything Can Begin to Look Like Nails. I wrote that as a matter of addressing an alternative view of the challenge raised in a better known adage: “when the only tool you have is a hammer, everything begins to look like nails.” However the thoughts there are raised and expressed, both of these adages address the issues of the familiar and expected, and of the assumptions that they all but automatically bring with them. That is also centrally important to this series’ flow of discussion, and certainly to this phase of it.

I have recently been discussing a new approach to visually depicting and analyzing business models as they are actually carried out in flows of operational processes and their causal relationships (in this series and also in a concurrently running second series: Intentional Management, and see in particular its Part 30.) And I concluded my discussion of this, at least as pursued up to here in this series, in its Part 30, by raising the issues of new technology acceptance and use.

I step back from the specific example of that new technology adaptation here, and from market-facing innovation per se, to consider business process innovation:

• First, I explicitly acknowledge that I have written fairly extensively about this arena of adaptive change in this blog – primarily as it arises and is developed and implemented and used in-house as a business evolves and adapts to remain as effectively competitive as it can be.
• But the business process-oriented innovation that I have been addressing up to here in recent postings to this series, is one that calls for new-to-the-business hardware, for it to be to implemented. And it is a type of strategy shaping operational change that most businesses would acquire as new and novel to them, from the outside and from explicit business-to-business markets and providers. So this business process modeling and shaping tool set, represents an explicit exception to the basic, more evolutionary path to business process innovation that I have addressed up to here.

Partly, this difference arises from the way that this new approach is hardware dependent, and explicitly novel-hardware dependent at that. But I would argue that the disruptive nature of this proposed innovation is a factor too, and particularly as it is a type of disruptive innovation that a developing business could market and offer, without in effect competing against itself in the process. Here, I refer to business consulting firms that bring such tools to their clients, as case in point examples.

• Many businesses that see this approach walking in through their front doors in the hands of a business management-oriented consultant, or consultant team, would see it as a specialized tool set that they would not need to develop and maintain in-house – when it might be more cost-effective for them to bring in the “outside experts” when and as needed, for carrying out this type of in-depth business process analysis, and when initially planning out its follow-through.
• Some, and particularly businesses that are led by earlier adaptor oriented managers, might want to bring this in-house so they could carry out at least select aspects of such a business modeling exercise on their own, and at their own schedule, and with fuller control over their own confidentiality due diligence as they do this – without having outsiders involved.
• And with time and as more businesses used this approach and saw it applied to their systems, this type of tool and its adaptation would expand out to include later and later adapting businesses, led by and managed by people who were more aversive to accepting early-stage change per se – and who need to see longer performance records for what they do adapt and bring in-house first.
• And pace and timing in adaptation of new here, would largely correlate with the overall pace of change and innovation – and market demand for it, in the businesses and their industries in question. Businesses that are always looking for that next innovative edge in what they bring to market and how, would be among the first to adapt anything significantly new and novel of the type that I have been discussing here – provided only that a case can be made that this would in fact give them a more competitive edge in maintaining and even expanding their overall market share. And established businesses in fully mature (and even relatively moribund) industries that look first to the traditional and tried and true, would be the last to adapt anything like this – and then, only after it has effectively lost its new and novel luster and become commonplace and standard.

I am going to continue this narrative in a next series installment where I will explicitly tie this line of discussion back to one of the core foci of discussion of this blog, when I deal with the question of information availability as an innovation driver – and as that helps to set the boundaries between innovation per se and disruptive innovation. And as part of that, I will discuss process systems complexity and the role of developing lean and agile systems as innovation enablers.

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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