Platt Perspective on Business and Technology

Innovation, disruptive innovation and market volatility 37: innovative business development and the tools that drive it 7

Posted in business and convergent technologies, macroeconomics by Timothy Platt on November 24, 2017

This is my 37th 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 6-36.)

I have been systematically working my way through a to-address list of topics points in recent installments to this series, that I repeat here for purposes of continuity. (Note that I append reference links to the ends of the points on this list that I have already addressed, indicating where I did so):

1. Innovation and its realization are information and knowledge driven (Part 32).
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 (Part 33),
3. Make innovation and its practical realization possible and actively drive them (Part 34, Part 35 and Part 36).
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 I turn here to consider Point 4 of that list. But before I do so, I want to at least briefly address a point that I have left hanging from the end of Part 36 as I finished up its discussion of Point 3: my promise to provide references regarding research financing here. I would at least begin that by offering two series that I have included in this blog, both appearing in my Macroeconomics and Business directory with its Page 2 continuation:

• Considering a Cost and Benefits Analysis of Innovation (that directory, postings 137 and loosely following for its Parts 1-9) and
• Building for an Effective Portfolio of Marketable Offerings (that directory, postings 196 and loosely following for its Parts 1-6.)

The first of these references takes a perhaps-more macroeconomics view of that topic than would be called for here and the second addresses it as one facet of a more widely inclusive discussion, though it does directly address the core issues that I simply allude to here in this series for developing and building a more balanced research portfolio per se. I am going to turn back to the issues of research financing in this series after addressing Point 5 of the above list, to at least begin to fill in what I now see as real gaps in my coverage of research financing and related matters per se.

With that stated, I turn here to more specifically address Point 4 from above. And I begin that by stating a point that should be completely obvious in the abstract, but that can become obscured in the specific context:

• Innovation offers perceivable value because it addresses what have been unmet, or at least inadequately met needs, and more effectively and/or cost effectively than anything already routinely available could. And knowing what to innovatively develop and how, on the developing and producing side to that, and knowing when a proffered new development would meet such needs on the marketplace and consumer side, are all about information development and availability, and communications (e.g. marketing, and ultimately on the within-business development and production side to this, as much as on the market and consumer facing side to it.)

If this bullet point and its issues hold for more routine incremental innovation per se, where in most cases all involved parties have a preparatory background for what is to come next from its already being at least somewhat familiar, it becomes much more pressing and more difficult to achieve when the innovation involved is disruptively new and novel and no one starts out with any basis of familiarity to help them think about it and address it.

A disruptively new and novel innovation might if really successful, become a new essential and a source of products that will become taken for granted as such. And to follow up on that, the tools and resources that we most fully take for granted, mostly all began as disruptively novel offerings and ones that only sufficiently wealthy early and pioneer adaptors would buy into – even as people in general come with time to take them for granted. Consider the electric light, the refrigerator, the automobile and telephone, or the cell phone for its more modern disruptive innovation if you will. I could, of course added to this list and in an essentially open-ended manner, but will only cite two more examples here that are particularly relevant to this series and its discussion here: personal computers and their smaller and more portable versions: laptops computers, tablets and the like, and the internet and the wirelessly connected, anywhere to anywhere internet in particular.

In their beginnings these initial disruptive innovations and the progression of step by step follow-up innovations that arose from them, all started out as unknowns to the general public. And it took time for them to become embraced as so basic to all of our lives that most all of us cannot readily imagine what our lives would be like without them. But their early and initial acceptance and use depended essentially entirely on effective information availability and sharing: first in the beachhead acceptance of pioneer and early adaptors, and then with waves of differently focused and framed messages, to progressively later and later adaptors – until even the late and last of them had adopted these changes too.

• And this information and its communication, shaped by and towards whatever adaption curve audience would be brought in next, had to both convincingly offer a case for buying into a given change, and convincingly explain what that change even is, as a source of potential value to a potential innovation adaptor.

With that noted for background purposes, I am going to more directly address Point 4 and then continue on to discuss Point 5 of the above list in my next series installment. And then as promised above, I will reconsider the issues of research financing: there, in large part from a more accounting and bookkeeping perspective. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

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Donald Trump, Xi Jinping, and the contrasts of leadership in the 21st century – 2

Posted in macroeconomics, social networking and business by Timothy Platt on November 19, 2017

This is my 27th installment to what has become an ongoing series of postings in which I seek to address politics in the United States as it has become, starting with the nominations process leading up to the 2016 presidential elections. See my series: Donald Trump and the Stress testing of the American System of Government, as can be found at Social Networking and Business 2, posting 244 and loosely following.

This can also be considered to represent my 56th installment to an ongoing series that I have been offering here concerning Xi Jinping and his still emerging and expanding leadership role in China. See China and Its Transition Imperatives, as it can be found at Macroeconomics and Business and its Page 2 continuation, as postings 154 and loosely following.

I began a comparative discussion of Xi Jinping and Donald Trump and their respective understandings of leadership in Donald Trump, Xi Jinping, and the contrasts of leadership in the 21st century – 1, with a brief and in-effect summarizing statement addressing this for Xi. I have been offering supporting background to what I offered there throughout the China series that I connect this posting to.

If I were to further and more tersely summarize even Part 1’s paucity of detail in this leadership diptych, it would be to say that Xi Jinping displays a seemingly endless ambition, coupled with an acute ability to both create and capitalize upon opportunity to achieve his goals. And he has the shrewd intelligence and the drive and determination needed to do that, unburdened by anything like excessive conscience to hold him back.

That said, and with my Trump series as a source of carefully considered supportive evidence, I begin this posting with a corresponding summary statement regarding Donald Trump, and certainly as he seeks to lead and govern as the 45th president of the United States. And I begin offering this summary by citing a basic point of observation that I have made in both job search and career development contexts, and in personnel and Human Resources contexts too. Self-evaluations rarely offer any real value in employee performance evaluations. The best employees with real skills and expertly meaningful professional experience rarely if ever rate themselves at the top of their performance evaluations; they know enough to see and remember where they could have done better – and where they have learned from that. And they know that there is always room for improvement. And the worst employees at any given business rarely know enough of what they are doing and of what they should be doing to be able to offer any meaningful response there. So they frequently assume that since they were hired and since they are still working at a business, they must be doing a great job there. They are in fact more likely to give themselves more top marks on the performance evaluation form questions that they answer, than the best and most skilled of their colleagues would. And this brings me to Donald Trump and his ongoing flow of self-evaluation praise. Donald Trump is tremendous as president – the very best ever. If you don’t believe me, just ask him, or rather just listen to a few of his self-evaluations for yourself, about how tremendously well he is doing (and even when he has proven unable to convince a US Congress that is led by members of his own political party to pass and enact even just one significant piece of legislation and in what is now over 300 days of his having held office, and when he has alienated essentially all of the traditional allies of the United States, and hopelessly divided our nation and over seemingly every single issue that he has spoken or tweeted about!)

To keep my supporting evidence for that as found in my Trump-related series up to date here, the House of Representatives did very recently pass a “tax reform” bill and pass it on to the Senate. But the House bill was filled with what are sometimes called poison pills, as far as the Senate is concerned and with objection from that coming from more than enough Republican senators to essentially guarantee that this fail to pass and be enacted into law too. I have to add that at Trump’s request, senators who are still supportive of him have added a significant amount of poison of their own to their touted version of this piece of legislature. And Trump lacks the vision or understanding to realize how this will impact on any possible success in his getting tax reform passed that is to his liking. And he lacks the leadership skills or ability to do anything about that, even if he were to come to realize where this legislative effort is headed.

And with that in-the-news background material update in place, I turn to the set of issues that I would really focus upon here: how easily and fully Donald Trump can be manipulated and particularly by national leaders whose interests gravely diverge from what would be best for, or even just good for the United States. And in keeping with my above summary statement regarding Xi, I note here that he has been particularly adept at manipulating Donald Trump for that.

I back up those assertions with some recent news stories of note. And my first is:

Trump, Aiming to Coax Xi Jinping, Bets on Flattery.

Donald Trump assumes that if he flatters others, they will simply go along with anything that he says. But if we have seen one irrefutable fact coming out of his recent visit to Asian nations, and repeatedly, it is that if their leaders flatter him and give him a good time, appearing to really appreciate him, then Trump will do precisely what they want him to do. And with that I offer:

Trump’s ‘Tremendous Success’ Abroad Is Overstated.

This is a fact check news piece that speaks for itself from the succinct cogency of its title. And with that news piece noted I offer:

Trump Declares ‘America First’ Policy a Success After Asia Trip.

Unfortunately, Donald Trump’s “America First” policy has in large part made the United States more irrelevant where he has pursued that goal, than anything else. And with that stated, I offer:

Vietnam, in a Bind, Tries to Chart a Path Between U.S. and China,
Seeing U.S. in Retreat Under Trump, Japan and China Move to Mend Ties and
Trans-Pacific Trade Partners Are Moving On, Without the U.S.

I simply add here that president Trump’s “America First” policy has had this type of negative impact for the United States, globally. It is not just the Trans-Pacific Trade Partners and their treaty-based open trade system that have continued on without the United States – and with Xi Jinping and his China taking the leadership role that the US would have been expected to assume for that. The Paris Climate Accord has also continued on, as a globally reaching effort to more effectively limit adverse climate change from human pollution. And yes, even with their environmental disaster of a track record and their still-over reliance on coal fired electrical power, Xi and China are taking a leading role there too – and with the United States left out and on the sidelines of any decisions reached or actions taken.

And with that, I turn back to reconsider my comments as offered above, regarding workplace performance self-evaluations. The only people who can legitimately proclaim Trump’s successes to date as president to be tremendous and the best ever, are Vladimir Putin and his colleagues, who arguably put in a great deal of effort to suborn the 2016 US presidential elections to put Trump in the White House in the first place.

Should I prefer to have Xi or someone like him to be president of the United States? Should I prefer to see China having to deal with a Donald Trump as their supreme leader? Personally, I see both as offering genuine cause for concern that either is in high office and anywhere, and effectively uncontrolled and uncontrollable in that. So I end this two posting, series joining sequence at a point where I do in fact view these two men in the same way. Meanwhile, we have to deal with both in office and at the same time and with each helping to bring out the worst in the other.

And meanwhile, I am certain to continue adding new installments to both Donald Trump and the Stress testing of the American System of Government, as can be found at Social Networking and Business 2, posting 244 and loosely following, and to China and Its Transition Imperatives, as can be found at Macroeconomics and Business and its Page 2 continuation, as postings 154 and loosely following.

Donald Trump, Xi Jinping, and the contrasts of leadership in the 21st century – 1

Posted in macroeconomics, social networking and business by Timothy Platt on November 9, 2017

This is my 26th installment to what has become an ongoing series of postings in which I seek to address politics in the United States as it has become, starting with the nominations process leading up to the 2016 presidential elections. See my series: Donald Trump and the Stress testing of the American System of Government, as can be found at Social Networking and Business 2, posting 244 and loosely following.

This can also be considered to represent my 55th installment to an ongoing series that I have been offering here concerning Xi Jinping and his still emerging and expanding leadership role in China. See China and Its Transition Imperatives, as it can be found at Macroeconomics and Business and its Page 2 continuation, as postings 154 and loosely following. I began writing about Xi in this series after his elevation to a position of supreme leadership in the Communist Party of China and of China’s government and military.

I began thinking and writing about Trump and his effort to achieve national prominence and power in the United States before his nomination as a Republican Party candidate, and well before his election to power, as addressed in my above cited series. And in a similar manner I began following Xi’s rising career path from before his ascension to supreme power in China too. And since Trump’s assuming power as the president of the United States I have written a few postings to each of the above cited series that in fact at least selectively discussed both of these people. But I have been thinking of the points of similarity and of contrast that they present to the world and I have been considering for months now, the possibility of writing about these two men in that vein, and in a more systematic manner than I have up to now. I at least begin doing so here, in this series-joining installment.

I fully expect to continue both of those series, each with basically their same original area of focus and each with their own separate narrative line. But here and for purposes of this posting and with our current, as of this writing context as it is, I begin to write of where those narratives of necessity have to overlap. And I begin doing so with Xi Jinping and with China, at a point in time in which Xi is beginning to fulfill what might be his ultimate political goal: that of becoming the next Great Helmsman in the all but deified image and stature of Mao Zedong himself. Then after offering this posting as a discussion of him, I will follow it with a next dual-series installment in which I will focus on Trump and will offer some thoughts comparing and contrasting the two. But first Xi and China, and I begin consideration of him with the one valid point of comparison for him in China and its history that I could turn to here: Mao Zedong.

Mao, as I have noted before in this blog, is still revered in China in a way and to a degree that overshadows any positive regard in the United States for any of that country’s founding fathers. But at the same time, and with Mao’s disastrous excesses through protracted events such as his Cultural Revolution, China’s senior Party and government leadership have actively sought to prevent any one individual from ever again rising to the level of limitlessly uncontrolled power there, that defined both Mao and his image, and Mao and his government.

A key element of that can be found in what up to now have become firmly entrenched term limits and upper age limits for positions of great power. And supreme leadership of their Communist Party, and of its centrally controlling Politburo Standing Committee, and through that of their national government and their military has been particularly controlled and time-limited in this manner. Their supreme leader cannot, according to this pattern of precedent and expectation, serve in that position for more than two five year terms, at which point they would be expected to in effect, retire from active service.

That has not meant former supreme leaders disappearing; several have in effect become behind the scenes power brokers and advisors. But it has meant their once-power being turned over to the hands of successors who in general guard their newly endowed power prerogatives jealously and who make their own decisions there. And a leader who seeks out their second term in supreme power has, since the end of the Mao era, always announced their choice of a possible (probable) successor as part of the panoply and pageantry of their being reelected to their office for their second (and last) term by the Party elite. They themselves are expected to formally begin the succession process that would replace them with this announcement.

It might be argued that I jumped to conclusions prematurely for Xi but I have already stated here and for many months now, that not only would he be reelected to that second term (which was obvious), but that he is likely to run for and serve an unheard of third term too. It is very recent news as I write this, that Xi Jinping has been reelected for that second term. But he did not in any way name or even suggest a favored successor in that, or even the possibility of such a successor for when his second term approaches its end. That omission is in fact, probably one of the two most important details to come out of this otherwise largely stereotypically scripted, staged showcase event. The second of those crucial details is one that I have seen touched upon in the news in passing but without real, at least publically discussed attention paid to its overriding significance. And I will end my at least initial discussion of Xi for purposes of this series with a discussion of that event.

The New York Times, to cite one of many possible news sources, made note of what at first glance might seem to be more of an honorific bestowed, than anything else in their October 25, 2017 news story:

China’s ‘Chairman of Everything’: Behind Xi Jinping’s Many Titles.

Mao held the title of Core Leader: an honorific that in effect designated him as representing the living heart and soul of China and of Chinese Communism incarnate. Since then, only two others have been granted that title: Deng Xiaoping and Jiang Zemin. But they were only awarded this honorific as they formally agreed to leave power and as they were doing so, making this “advancement” more of a retirement gift than anything else – like awarding a long-term employee a gold watch upon their retiring and for good from a business. But this was Mao’s title and now Xi has been awarded it when he is going to be staying on in a position of supreme power and with nothing in place that might indicate any end to that. That difference makes this honorific more than just an empty if appreciative title.

I fully expect to see Xi Jinping take on the fuller mantle of Mao with his being awarded two other titles that up to now at least, only Mao himself has achieved: Chairman of the Communist Party (which he in fact already is in practice) and State Chairman. Xi was explicitly addressed as China’s Helmsman when being reelected, in keeping with Mao’s special title of Great Helmsman. But shared special titles only constitutes a small portion of what Xi Jinping and his predecessor Mao Zedong hold in common:

• Both assiduously cultivated cults of personality to create widespread admiration and support throughout China and across its many peoples. And both have achieved dramatically greater success in this than have any other head of state since the founding of the Peoples’ Republic of China. This means building what can amount to an unassailable power base.
• Both just as assiduously and systematically have rooted out and destroyed any potential opponents in their rise to power. Mao used both mass purges and show trials that made special examples of particular enemies, and Xi has pursued a largely similar course with his anti-corruption campaigns, among other competition limiting initiatives.
• Both collected titles as suggested above, and Xi already has amassed more of them than any of his predecessors in power in China since Mao himself. But more importantly, both cultivated positions of direct power and direct influence in all potential power bases with each of those titles representing mastery over one more of them, with that including China’s Communist Party, their government, their manufacturing sectors, and for Xi their growing private sector, as well as a host of specific power centers within these larger entities.
• And both Mao and Xi proved themselves to be ruthlessly systematic and calculating in all of this. I have posed this bullet pointed list in the past tense in honor of Mao, but all that I cite here represents Xi’s still emerging present too and his likely pattern of decision and action moving forward as well.

I could cite any of a large number of recent news stories that highlight aspects of this set of claims. But I chose to limit myself to sharing one such news piece here, that reflects how Xi has taken his second term reelection as a renewed starting point for building and consolidating his power from:

China Sets Date for Major Communist Party Reshuffle.

Xi Jinping really is in the process of rebuilding the Communist Party of China of today and tomorrow in his own image, much as Mao did in his day. And this brings me to the last point that I would raise here. Xi also has Donald Trump as a perhaps unwilling asset, but nevertheless as a very real one. I have discussed the problems and challenges that China has faced for a number of years now in this blog, with their Party and government corruptions and inefficiencies and with their fractured economy. Ultimately centrally controlled command economies that are ideologically driven cannot successfully compete and endure. If Donald Trump has done nothing else in his foreign “policy” it has been to create a power vacuum that has taken a tremendous amount of pressure off of both Xi as an individual, and China as a nation. He has opened the door for China to more fully lay claim to what amounts to ownership of the South China Sea and the East China Sea and all of their resources. Trump has opened the door for China to claim strength and hegemony in many directions, with that including China more effectively glossing over its economic weaknesses and failures as Xi has sought out and pursued all possible opportunities for him to fill those power vacuum gaps that Trump has created. And in that regard I offer one more news story reference here, switching discussion from a Xi perspective to a Trump one:

Trump Heads to Asia with an Ambitious Agenda but Little to Offer.

The power vacuum from the West continues on. And with this point raised, I turn to more explicitly consider Donald Trump in this series. And in anticipation of that, I note how the Trump administration has been hamstrung by largely self-inflicted chaos since its beginning and that it is increasingly attempting to function under a cloud of possible impeachment charges. So the differences between Xi and Trump are fairly clear at least in broad outline here. But the points of similarity between these two men bear noting too.

I will turn to that set of issues in my next, here dual-series installment. Meanwhile you can find my Trump-oriented series at Social Networking and Business 2 as noted above, and my Xi-oriented series at Macroeconomics and Business and its Page 2 continuation.

Innovation, disruptive innovation and market volatility 36: innovative business development and the tools that drive it 6

Posted in business and convergent technologies, macroeconomics by Timothy Platt on October 15, 2017

This is my 36th 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 6-35.)

I have been systematically working my way through a to-address list of topics points in recent installments to this series, that I repeat here for purposes of continuity. (Note that I append reference links to the ends of the points on this list that I have already addressed, indicating where I did so):

1. Innovation and its realization are information and knowledge driven (Part 32).
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 (Part 33),
3. Make innovation and its practical realization possible and actively drive them (Part 34 and Part 35).
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 began addressing Point 3 of this list, as just noted above, in Part 34, and continued that in Part 35 by raising a set of three issues that I would argue, need to be addressed in order to even just preliminarily resolve Point 3 for purposes of this series:

• A basic assumption as to what types of already-held and routinely used business information would be required in a genuinely disruptively innovative context, as for example might be explored and pursued in an innovation-supporting service, department or more separate facility within a business.
• An implicit financial assumption that runs counter to what would more generally be automatically assumed when innovation, and the research and development that it calls for are considered. I will at least briefly address that “starter” assumption here, offering some references that delve into its issues. And I will offer a basic rationale for justifying this alternative point of view assumption that I offer here for purposes of this series.
• And a fuller reconsideration of timeframes in all of this, where outside forces can easily become the driving shaping factors for all of this but where within-business factors always have to be accounted for too – and where they can be less examined in any planning that takes place.

And I delved into and discussed the first of these sub-issues there. My goal for this posting is to address the second of them and at least start addressing the third and final of them here too. Then when I have addressed all of them, as required in the context of this series discussion, I will continue on to Points 4 and 5 of the main to-address list as repeated above.

And I begin all of this with financial considerations, and a set of points that strikes to the heart of this series, and certainly as organizationally summarized in the starting paragraph here. And I begin that by reframing and reconsidering what applied research and pure research actually are, at least when considered from a more strictly financial perspective.

• Applied research and its most directed practical extreme of specific product development, are channelized in what can be considered at least somewhat tested and validated directions, and with the more product-specific end of that short spectrum quite securely reliable for that. Success there can mean adding new life to an already developed and successful product or product line, and failure: if an attempted upgrade or advancement does not cost-effectively work out, will at least offer practical insight for further next-step product advancement.
• Applied research, as considered here, offers what might be greater uncertainty and definitely when a new, next generation product is being attempted that would call for rethinking, and for manufacturing line retooling. But conversely, this also carries potential for proportionately larger rewards too. In any case, and focusing on that word “applied”: this type of research, like still more focused product development, follows a more linear development change and modification and upgrade pattern and with lower levels of overall risk associated with it, in keeping with the incremental improvements, profit and value creation potential of simply working to create a next generation upgrade.
• Pure research on the other hand, carries more dramatic value creation and loss possibilities, with its potential for developing successful disruptive innovation and game changing new product development – or dead end failure if that does not work out. Yes, sometimes failed pure research does bring insight that can be turned into next attempt success, and often in completely new and otherwise unexpected directions when that happens. But this delayed and alternative success cannot be counted on.

Let’s start addressing the finances of this, with an explicitly stated assumption that can be considered a basic if mostly just presumed mantra, for those who run and lead corporate research and development facilities:

• Appropriately scaled and selected innovation that is kept in focus (no scope creep) can be cost-controlled and within budget.

This, in practice, means balancing the costs and benefits: profit and risk potentials included, of suites of pure and applied research projects and initiatives, with the more secure and reliable of them as found towards the specific product development and improvement end of this, in effect bankrolling the more pure end of this overall effort and certainly for constraining overall risk faced. And in that, this is all about developing and carrying through upon balanced overall research project portfolios: a core job responsibility for more senior managers and directors of larger, wider-ranging research facilities.

I said above, that I would offer an alternative financial model here for understanding and managing overall research for an organization, and I do so with this perhaps-baseline, more standard approach held up for comparison. And I begin this by noting a detail in the above, standard-cant approach that I intentionally failed to acknowledge there, and that tends to be lost in most such policy and practice development: the role of timelines in all of this, and particularly timelines that extend beyond reporting quarters.

• A business that assiduously seeks to pursue stable, risk limiting and controlling safety in how it selects and benchmarks and carries out its research, and in how it seeks to balance its overall books for its research facility, will probably do very well from that in any given short term timeframe. It will probably succeed there in middle-range timeframes too, where short and middle-term are measured in terms of the rate of advancement in their overall industry for new product development, and in their markets for the pace of change in consumer demand.
• But that same business has to assume that pursuing a simpler short-term oriented approach here, will only lead to increased risk, and even what is essentially a certainty of failure long-term. The only way that a business, and certainly one in a rapidly advancing industry that is driven by disruptive change, can succeed long-term and in the face of this ongoing flow of challenge faced, is if it is willing to become more risk tolerant in its own next steps forward, building for its future through research and development.

This is important enough to bear repeating. Businesses that cannot and do not take this leap into the admittedly unknown, ever, might be secure in their current here-and-now for right now and in their immediate and shorter term future. But they also run the risk and certainly longer-term, of being blindsided by their competitors who do innovate and who do support the potential for innovation that their employees can offer. And with this, I argue that at least longer-term the “prudent and well balanced research product portfolio” of above, can prove to be overly cautious and overly risk-taking and certainly long-term, as a result. And safety, longer-term, can and often does mean being more risk accepting in any given shorter-term.

How can an effectively, efficiently run business manage this and still remain stable and resilient? I offer an at least easy to state possibility here, and a thought point and a starting point for more focused discussion. A business can in fact set up and run a stand-alone research facility in-house and basically in accordance with the above stated research finances mantra with its risk and costs balancing. But it can also support a level of special research projects that might be carried out within this same facility, but that would be separately financed, from a reserves account that would be set up for this purpose. And researchers who were so interested, would compete for these special blue sky research funds and for the necessary space and other resources needed to carry out their projects.

Note: this can mean enlisting and developing research excellence from in-house, but it can also at least include search for new talent and new potential from outside of the business, that could be brought in with contractual promises in writing to support the research that these professionals have been striving to be able to carry out.

And with this, I have at least briefly discussed both of the remaining sets of issues that I cited early in this posting as being necessary in order to complete discussion here, of Point 3 of the basic to-address list under consideration. I am going to turn to consider Point 4 and Point 5 of the basic list from the top of this posting, at least beginning that in my next series installment:

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 yes, I will also offer the reference links that I promised in this posting, regarding research financing, in the next installment too, where they will prove relevant in the contexts of Points 4 and 5 too.

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.

Innovation, disruptive innovation and market volatility 35: innovative business development and the tools that drive it 5

Posted in business and convergent technologies, macroeconomics by Timothy Platt on September 5, 2017

This is my 35th 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 6-34.)

I have been working my way through a to-address list of topics in the past several installments to this series, that I repeat here for purposes of continuity of narrative (having already addressed specific points from this list in earlier postings, as parenthetically noted below):

1. Innovation and its realization are information and knowledge driven (Part 32).
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 (Part 33),
3. Make innovation and its practical realization possible and actively drive them (Part 34).
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.

My goal for this posting, as of when I first wrote Part 34 was to finish discussion of Points 1-3 and of Point 3 in particular here, at least for purposes of this series, and to then at least begin a discussion of Part 4 and its issues. With further thought, I realize that that goal was too ambitious for one posting, so I begin this here with the final thoughts (for purposes of this series), related to the first three Points of the above list. And I begin that by listing three topics points that I raised in passing in Part 34, but never actually discussed there:

• A basic assumption as to what types of already-held and routinely used business information would be required in a genuinely disruptively innovative context, as for example might be explored and pursued in an innovation-supporting service, department or more separate facility within a business.
• An implicit financial assumption that runs counter to what would more generally be automatically assumed when innovation, and the research and development that it calls for are considered. I will at least briefly address that “starter” assumption here, offering some references that delve into its issues. And I will offer a basic rationale for justifying this alternative point of view assumption that I offer here for purposes of this series.
• And a fuller reconsideration of timeframes in all of this, where outside forces can easily become the driving shaping factors for all of this but where within-business factors always have to be accounted for too – and where they can be less examined in any planning that takes place.

I will of necessity begin addressing Point 4 of the above to-address list in dealing with these issues and even if I approach them from a Points 1-3 perspective. Then I will continue on to example Point 4 and then Point 5 of the above list. And with that reorienting note for what is to follow from here, I begin with the basic assumption of the first of the above three bullet points:

• The more innovative an idea is and the more disruptively novel it is in relation to what a business more routinely does, the less it is going to have to draw on the information flow that more conventionally derives from, fits into and supports their business as usual.
• Innovation and particularly novel and disruptive innovation needs to find its own path, and with its own, new types of data and understanding.

According to that assumption, innovation can be walled off from business-as-usual for the most part, with its own separate accumulated body of proprietary data and processed knowledge and without real need of all that much routine business information in place – besides basic information as to where current products or services are breaking down if a New approach would be developed to address that. And even then, the information presumed to be needed might be very circumscribed, and to limit introducing the biases of the past into the creative process if nothing else.

This understanding would fit into and support a simple, basic default confidential and sensitive business information management system that would, for example, limit access to sensitive trade secret manufacturing knowledge to the people in production who have essential need of it. And this would also fit into and support the development of within-business research centers as essentially separate and independently run, if wholly owned facilities too, with their own pools of sensitive and confidential data and processed knowledge too.

It has been a long time now for this, but I have given talks at in-house but separately run and conceived research facilities of this type, and particularly in the pharmaceutical industry from early in my professional life when I was still actively doing basic biomedical research and before I turned professionally towards organizational issues and consulting per se. So I write here of systems that I have seen up-close and first hand, where I have gotten to know the people involved who work at and run them. I still saw myself as a research scientist at the time, but even then I was acutely aware of and interested in the business model implications of that approach to research and development. So I actively studied that aspect of what I was allowed to see in those businesses.

How does this assumption hold up and longer-term? I would argue that it would not, and certainly not in its pure information and knowledge partitioning form. Put slightly differently, and in terms of individual innovative initiatives:

• That assumption would only hold true, if it does at all,
• If and where a new and disruptively-different innovation under consideration does not fit into and contribute to the ongoing business for anything in particular that it has historically done, and even just in a peripherally connected new direction.
• Restated from a different direction, an assumption of validity to an essentially complete walling off of essential information flow between a business’ production systems and its research and development, cannot succeed if the New that would be developed is to be integrated into the business as a whole and into what it does, as a new part of a consistent and coordinated larger whole.

The pharmaceutical research facilities that I got to visit, as cited above, succeeded in bringing developed value to their parent businesses, precisely because the walls there were selectively impermeable where that was needed and selectively porous when that was.

I am going to continue this discussion in a next series installment, with the second of the “clean-up” issues that I am adding here to round out my coverage in this series of Points 1-3 from above.

• An implicit financial assumption that runs counter to what would more generally be automatically assumed when innovation, and the research and development that it calls for are considered. I will at least briefly address that “starter” assumption here, offering some references that delve into its issues. And I will offer a basic rationale for justifying this alternative point of view assumption that I offer here for purposes of this series.

Then I will discuss the third and last of those bullet points and move on to address Points 4 and 5 of the main topics list that I have been working my way through here, as repeated at the top of this installment. 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.

Innovation, disruptive innovation and market volatility 34: innovative business development and the tools that drive it 4

Posted in business and convergent technologies, macroeconomics by Timothy Platt on July 25, 2017

This is my 34th 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 6-33.)

I began Part 33 of this by repeating a to-address list of points that I am now working my way through. And I repeat this list here for smoother continuity of narrative, as I continue systematically addressing its issues:

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 at least initially dealt with Point 1 of this list in Part 32, and its Point 2 in Part 33. And I turn here to consider the above restated Point 3 in that same vein. And to be more specific here, I used Points 1 and 2 of this list to at least briefly sketch out a fundamental problem:

• A fundamental challenge that businesses face when they simultaneously seek to safeguard sensitive and confidential proprietary business information,
• And still remain open to the possibilities of developing and capitalizing on innovation, and even disruptively novel innovation where new communications patterns and information sharing allowances might be needed in order to effectively bring the right combinations of expertise together for that.

Rules based information access systems, of necessity are always built and implemented in terms of a business’ current here and now, and in terms of current information sharing needs – assuming of course that they are kept that up to date. Innovation and disruptive innovation in particular can demand new and novel there, as previously unconsidered combinations of personnel and unconsidered combinations of expertise and experience that they could offer become essential if their business is to develop its next step-forward future.

And this brings me directly to the above Point 3, and implementation. And it also brings me back to a specific business organization approach to making an enterprise more effectively innovative in practice, that I initially offered in my 2012 series: Keeping Innovation Fresh (see Business Strategy and Operations – 2, postings 241 and following, and in particular, see its Part 7 and following where I discuss transition committees.)

• A well organized and run transition committee serves the business that it operates in by helping to identify innovation opportunity that is being developed in-house, that holds potential for offering value to the business if further developed into fully practical implementation. And such a committee helps to facilitate this transition from proof of principle and concept, to practical realization. It bridges the gap between research and conceptualization and its output, and practical implementation that can be brought to market.
• For purposes of this series, consider that a second step to a larger and more comprehensive overall process and system of them that any successful in-house innovation has to traverse if it is to succeed and become a value creating part of the business that it first arises in. My focus here is on what precedes that step, in bringing the personnel and other necessary resources together to make development of initial innovative potential possible. And bringing together both the necessary people and the necessary information that they would develop New from, is crucial there.

In practice, the same people who comprise a transition committee might also find themselves responsible for championing the initial first step in the creation of potential new innovation too, from the initial idea stage. And having such an innovation-supportive group within a business is all but certain to at least help in that direction. But in practice, no single group of employees and managers can do all of this alone, and with anything like the reach into their business that they would need for that and across the full sweep of their table of organization. Keep in mind here that some of the most creative and ultimately valuable initial innovation ideas, can and do come from unexpected directions in an organization.

Making the first half of this system of processes work: making the first initial innovation identifying and supporting and enabling step work, calls for participation by both lower and middle managers who those creative hands-on employees report to, and participation from the risk management people who set and administer information access and sharing policy and their rules-based implementation.

I have said this before in this blog; this means supporting employees and managers who would step out beyond their routine day-to-day to attempt new, and this means senior management allowing for and being tolerant of failure, where not all attempts at developing innovative new possibilities work out successfully.

• The more actively and far-reaching a business seeks to be as an innovator in its industry and sector, the more formal structure is probably going to be needed to make this work and consistently so – and the more important it is for them to actively pursue this.
• A certain amount of overall organizational scale in this is probably going to be needed in order for a business to even have an organizational structure such as a transition team in place. Though I add, participation in this type of endeavor can be part-time and only be called upon on an as needed basis and as first step processes identify innovative potential for them to help promote and further develop. And, of course, the people who would do all of this have to be supported in their being allowed time and other resources to work on this too, along with their more usual workplace responsibilities.
• Note that I did not start out with cost considerations here and that was for a reason. As an initial step, the important goal is usually a proof of principle validation that there is something that might be of value if developed in a practical implementation direction. If this is done carefully, costs can in general be minimized and even if their inclusion on a budget might be notable. That raises the question of what budget and what line in the business’ accounting this would be charged too. And selecting there can require financial gatekeeper support too.
• Then taking that next step beyond basic proof of principle, takes effort and funding too and even with a focused prototyping effort. This is where the transition committee of my earlier series: Keeping Innovation Fresh, actively enters this narrative.

What is the single biggest challenge that seems to arise and throughout all of this, and particularly for successful, profitable businesses?

• Taking off the blinders that success can put in place, and looking past the currently successful and profitable, and in new directions
• And when the current bottom line for that business, and when the demands of its markets, are not already asking for new and different,
• And when the due diligence security of tried-and-true and fiscally known and at least for-now safe, would seem to mitigate against pursuit of research and new product development, and innovative change.

Businesses that cannot and do not take this leap into the admittedly unknown, ever, might be secure in their current here-and-now for right now and in their immediate and shorter term future. But they also run the risk and certainly longer-term, of being blindsided by their competitors who do innovate and who do support the potential for innovation that their employees can offer.

And with this I divide risk and benefits according to timeframes considered, and as a direct consequence of considering the How of actually carrying out the above list’s Point 3.

I am going to add some more to that line of discussion in my next installment to this series, and will proceed from there to address Point 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.

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.

China and its transition imperatives 46: thinking through Xi Jinping’s current realities in a larger context 4

Posted in macroeconomics by Timothy Platt on June 20, 2017

This is my 54th installment, counting supplemental additions, to this ongoing and even open-ended series on China. Basically, what I am doing here is to trace how China has changed under the rule of Xi Jinping, with this series narrative starting approximately one year after he first took leadership of their Politburo Standing Committee, and through that of their entire Communist Party of China and of China as a whole (see Part 1, as written to first go live on this blog on February 8, 2014.)

I initially planned on writing this posting to go live on May 29, 2017 but have delayed doing so until now. It is not that I have not seen any recent news worth reporting on or analyzing here, as coming out of China. It is more because so much of that has simply fit into an ongoing pattern that I have been writing about for years now. And I have to add, I wanted to see at least something of how Xi Jinping would respond to Donald Trump and his chaotic bombast before writing this posting, and particularly as Trump has reached out towards China, and in what could arguably be seen as both positive and negative ways in Beijing.

On the negative side and certainly from a China perspective, Trump has presented himself as a source of destabilizing threat to China and in a number of significant ways and since his election. As an example of that, I have already made note of his direct dealings with Taiwan and of his privately held company seeking out massive business opportunity there – as the sitting president of the United States and regardless of any conflict of interest considerations that this might raise. It is fundamental to China that Taiwan is a part of one China, with Beijing as its true capital and the People’s Republic of China government the one true power that is supposed to be governing there: the so called One-China Policy.

Previous US presidents: Republican as well as Democratic have at least paid lip service to this understanding and have, for example, refrained from directly speaking with the president of Taiwan and even as the US and Taiwan governments have cooperated with each other in practice and on a variety of issues. Trump tore away that veil and in ways that made it look like he would completely repudiate the One-China Policy that has helped to stabilize the relationship between the Beijing and Washington governments overall, by formally recognizing Taiwan independence.

Trump has not actually taken that threatened step, but I pick this specific example here for a reason. Even without that move on Trump’s part, it represents a completely avoidable source of friction between Beijing and Washington: this unconsidered challenge to this accommodating fiction. And Trump’s action in this regard was carried out without any real thought as to its possible consequences, except perhaps for himself. He appears to have found it ego boosting to be called by yet another head of state. And he and his family business were and probably still are trying to land a massive infrastructure development project in Taiwan that would be expected to generate hundreds of millions of dollars in profit for himself.

On the positive side, Donald Trump has continued to do personal business with Mainland China and their state owned and at least de facto state controlled businesses, as well as with their government. I cite his and his family’s continued efforts to buy up Trump-related brand rights in China as well as his ongoing outsourcing of manufacturing of Trump branded merchandise to that country.

Trump and his election to the US presidency have been a mixed blessing to China. When I initially wrote of this in earlier installments to this series, I stressed the negative side-tipping value of his chaotic nature, and how even a seemingly stable positive for China can be made to disappear at an unconsidered whim and in an instant, as Donald Trump tweets and speaks off the cuff and at least seemingly without a thought in his head (see Part 39, Part 40 and Part 41.) But his instability and chaos, in and of themselves are probably the greatest positive that Trump could confer on China and it is one that he has given to the Russian government of Vladimir Putin and others too: and certainly for nations that directly compete with the United States. Trump has created a power vacuum from his diminishment of United States authority and influence in the world, as he repeatedly places American trustworthiness and reliability in doubt from how he repeatedly displays his own.

Is the government of the People’s Republic of China and the reign of their one allowed political party: their Communist Party now more stable and secure as a result of this seeming opportunity? They still face the same fundamental challenges of corruption and inefficiency and of authoritarian excess in their own systems as before, and they still see the same emerging consequences of them and in their air and water pollution and other environmental quality challenges that they cannot hide, and in their structurally unstable economy, among other fundamental challenges. But Donald Trump has, nevertheless, given Xi and his government and Party what amounts to a new lease on life. And as I will discuss in a few days in a concurrently running series, Donald Trump has made his influence self-limiting. It is now increasingly likely that he will face impeachment charges and that he will be removed from office, and by his own hand as he makes no effort to change either his behavior or that of his inner circle as they report to him and do his bidding (see my subseries: Donald Trump and the Stress Testing of the American System of Government, as can be found at Social Networking and Business 2, postings 256 and following.)

What will happen when and as Trump begins to really lose his support, and even in his own Republican Party in Congress, and in fact nationally in the United States? A great deal of evidence has been developed to the effect that Russia and their government led a systematic effort to throw the 2016 elections in the United States and help Trump win the presidency (see the above cited Trump-related series for references to that.) But the increasing sanctions imposed by the United States Congress on Russia and on Russian interests, in response to that and the re-imposition of cold war level opposition to Russia’s government in the United States and increasingly in the West as a whole, have made that a pyrrhic victory at best for them.

Will the American government and the American private sector take a new look at China and their expansionistic approaches to the East and South China Seas, among other ventures, if there is a Trump impeachment driven change in the American government’s executive leadership, and with effort made to reestablish America’s global position of authority that Trump has squandered?

I wrote in Parts 39-41 of this series and in other installments to it since then of the uncertainty that Xi and his government now face from president Trump and his presidency. And I find myself doing so again here, as I contemplate a possible early shift from a Trump presidency and most likely to a Pence presidency from a Trump impeachment. Will that happen? If it does, what would that mean to China specifically and to the world at large? And if Trump simply becomes more and more hobbled and isolated as president, but remains in office for at least one full term, what would that mean, as the United States Congress takes action, and even in complete defiance of Trump administration policy or directive?

I have a lot of specific in the news events and current events points of analysis that I have been accumulating for discussion in this series, and will probably delve into at least some of them in my next installment to it, but I decided to step back from these more-current news update details for this posting, to consider currently emerging and evolving events and their patterns from a wider perspective. And I end it by raising a point of assumption that I have been making here in this posting, that might or might not be true:

• Do a chaotic Trump presidency and the globally impactful power vacuum that he seems intent to create actually benefit China and Xi Jinping and their Communist Party, or any other powers or potential powers as they seek greater voice and authority in the world?
• And considering that strictly in terms of China and in terms of their longer-term prospects, does a Trump presidency actually confer any greater stability or resilience to them?

I leave these as open questions worth thinking about. As of now I expect to return to this series, with a next installment in approximately one month, and will undoubtedly at least briefly address those questions there. Meanwhile, you can find this entire series and all of its postings at Macroeconomics and Business as postings 154 and loosely following for Parts 1-12 and for a supplemental posting: Part 12.5. And see Page 2 to that directory for subsequent main sequence and supplemental installments to this. You can also find other, China-related postings and series at those directory pages, and at Ubiquitous Computing and Communications – everywhere all the time too. (And as a time stamp, I wrote this as a single draft on June 15, 2017.)

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 even 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 in 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.

Reconsidering cause and effect assumptions in feedback-driven systems: implications for real-world business and economic systems planning

Posted in macroeconomics, reexamining the fundamentals by Timothy Platt on May 28, 2017

Feedback-driven systems fundamentally violate at least some of the basic underlying assumptions that underlie traditional cause and effect models. Or rather they tend to violate tacit assumptions that many and even most people tend to make concerning cause and effect and what those terms mean. The reason for that is very simple; in a truly causally connected linear once-through system, cause and effect are categorically distinguishable and both for their temporal order and for their respective fundamental natures. They are completely separate in nature and function then. And most of us at least occasionally, approach causality as if it routinely arose in a vacuum in this manner, and with a clearly definable starting-point causation and an end-point consequential effect. But causation almost always actually arises in the course of ongoing interactive processes where resultant effect leads to next-step cause and even in a tightly cyclical manner. It is rarer that causation per se can be simply and entirely viewed and understood outside of any possible pertinent context, and certainly when considered in complexly organized systems such as flows of business supporting operational processes.

Let’s consider such a linear once-through system as noted above, as a starting point for further discussion:

• If I hold a baseball out in front of me and let go of it, that action on my part coupled with the predicable action of gravity on the ball, as a complex of causal factors in play there, leads to the results of that ball falling and in time hitting whatever surface is immediately below it.
• Cause and effect are readily categorically distinguishable in this scenario, as each side to the cause and effect relationship described in it takes place in a particular temporal order, and right up to the point where that ball actually strikes the ground and the scenario ends.

But in a cyclical cause and effect-driven process, effect as arrived at in any one turn of that cycle becomes input for the next round of activity. And this brings up new types of functional relationships, and particularly as activity in one round in such a recurring process might have impact that continues past the end of that one cycle itself. This possibility in effect defines what feedback is, that effects achieved in any given cycle in a recurring process do not simply end there, but rather have longer term and recurring consequences that can be dampening overall, or additively expanding in cumulative influence (e.g. as negative and positive feedback respectively.)

Effect, in effect becomes cause or at the very least a parametric shaper of it in cyclically structured causally driven systems. And this has implications that are not always taken into account, and particularly in complex systems as arise in business operations and economic systems modeling.

Let’s consider this in the less abstract context of a specific working example, as drawn from economics: calibrating where a best tax rate would fall for maximizing revenue generated for a government, along a Laffer curve.

The basic concept of the Laffer curve seems to be relatively intuitively obvious. The maximum overall amount of revenue that a government can secure and bring in through taxation depends on the tax rate that it imposes as a percentage of revenue generated in the communities and society that it governs. If a government sets its tax rates at 0% it is not going to generate any revenue from that, and if it seeks to impose a 100% tax rate, it is unlikely to generate any revenue then either. In between it can generate a positive taxation-based revenue flow for itself. And the Laffer curve model seeks to predict at least categorically where as a matter of tax rate imposed, it can maximize the taxation-based revenue that it can receive. That percentage determination, of course depends on what assumptions are being made and both with regard to outside societal factors and with regard to government activity and its involvement in the overall economy as well.

Let’s at least begin to examine the assumptions made here with a brief and selective consideration of the high end of the curve for tax rate imposed. In a closed economic system where at least one crucial resource that is essential for day-to-day life, is monopolistically controlled by the state, and when that state can and would offer all goods and services that its citizens could or would access and use, then it would have the power to impose a 100% “tax” rate – in effect imposing a state-ownership form of servitude on one and all. And the wealth of that society as a whole and any “revenue” generated through its state-owned and controlled systems would go to and remain in the state and its hands.

• Money, as such would be more an accounting abstraction than anything else in such a dystopian, all government controlling society, but its movement would be entirely into government hands and coffers and would be maximized for that – not zero in value.

Now let’s consider less centrally controlling, but still significantly restrictive and controlling systems in which a government in effect skews the marketplace and its monetary value flows: its cumulative cash and monetizable value transfer flows. The more significantly a state controls and shapes availability of goods and services, and particularly for essential ones, the higher the tax rate it can impose and still receive greater overall revenue flow value from that.

Different economists arrive at very different understandings as to where a maximum revenue generation point would be for a conceptual model such as the Laffer curve. And the line of argument that I have just been offering here represents just one point of assumption that can lead to differences in what is concluded – and particularly when different people start out with different automatically assumed, axiomatic assumptions as to what would and would not arise in and shape a real-world marketplace. And I would argue that feedback and process cyclicity in general, drive the positioning of where a tax revenue generation maximum would fall, along any given proposed Laffer curve representation of an economy, as ongoing experience and feedback from it by members of the general public determines the overall levels of revenue generation that they will sustain that would be taxable.

The points that I make here apply to business systems too, and even in the extreme example form that I made note of above where a government controls and owns essential products and services, and taxes for access to them. Here and in a business systems context, consider the historical examples of geographically relatively isolated company towns, where a single business is both the major employer and economic driver of a community, and owner of essentially all stores and related businesses there that provide day-to-day essentials such as food and clothing. Members of such communities can all in effect become as if serfs to those community and region-dominating businesses, and in a manner that parallels the situation faced in my above-offered government controlling example. And I add that where money per se becomes essentially an in-government abstraction there, company towns and businesses that own them have commonly, historically paid their employees not in nationally minted currency but in their own company script – that only their company owned businesses would accept as if legal tender.

• Where that magic number maximum for tax revenue generated falls on a Laffer or similar curve, depends entirely on what political and politically-shaped economic assumptions are made, and particularly when they are simply assumed and axiomatically so.
• And where that magic number falls along such a curve, crucially depends on what feedback and societal response patterns are assumed and on how members of such a society calculate what is and is not in their own best interests to do.

And this conceptual gap in how a Laffer curve model is more usually formulated is at least partly informative as to why I see problems in the basic underlying model as whole in framing any given specific tax policy: it is presented as if it were a systematically analytical model but it leaves too much out, that is not going to be addressed and certainly in anything like partisan political debate, that would go into actually meaningfully applying it in setting taxation policy.

As a final thought here, I acknowledge one that I have been implicitly basing this posting on up to here on a number of unstated assumptions too, and on assumptions that I readily acknowledge are not always going to be valid. When you review the maximum personal income tax rates that nations impose upon their citizenries as of this writing, you find extreme ones for high percentage that would not fit all Laffer curve calculations and certainly as they would be arrived at for nations such as the United States (see List of Countries by Tax Rates.) Finland, for example, is listed as having income tax rates that go as high as 61.95% when combining maximum national and municipal tax rates and added-in social security taxes too.) Even this though, would actually fit the basic model if you consider the value of services provided by the state, as balancing competition to pressures that higher tax rates can impose on overall productivity levels in an economy. But on the other hand, there are low-end for income tax rate nations, that in effect have what amounts to negative tax rates for their own citizens. Some of the major oil producing nations have in effect subsidized their citizenries in this way. And if the Laffer curve breaks down for the occurrence of any circumstances where a 0% income tax rate would make sense financially for a government, it certainly does not address nation states making ongoing support payments of this type. This can only be addressed by changing the basic assumptions to allow for nation states that own significant means of value production: such as oil production, where they in effect share the wealth with their own citizens and even to a level that makes all of their citizens wealthy.

I add this final detail here to highlight that I have only begun to touch upon the types of assumptions that an economic paradigm model such as the Laffer curve rest upon. And differences in what is assumed behind it, can and do render the resulting calculated curves into what can amount to veritable Rorschach tests. This is all very important and certainly as it looks like partisan Laffer curve predictions and calculations as variously made by differing ideologs, are going to play an important role in any Congressional debates and actions taken in the United States and I add elsewhere as well, in the coming year and more as tax policies come under review. So this is not just an abstractly considered topic or posting.

You can find this and related postings at Macroeconomics and Business and its Page 2 continuation. And I also add this as a supplemental posting addition to Section VI: Some Thoughts Concerning a General Theory of Business, as can be found at Reexamining the Fundamentals.

China and its transition imperatives 45: thinking through Xi Jinping’s current realities in a larger context 3

Posted in macroeconomics by Timothy Platt on May 15, 2017

This is my 53rd installment, counting supplemental additions, to this ongoing and even open-ended series on China. Basically, what I am doing here is to trace how China has changed under the rule of Xi Jinping, with this series narrative starting approximately one year after he first took leadership of their Politburo Standing Committee, and through that of their entire Communist Party of China and of China as a whole (see Part 1, as written to first go live on this blog on February 8, 2014.)

I have been repeating variations on the above orienting paragraph in essentially every installment to this series, as a means of maintaining a clear continuity of discussion and focus in it. But I explicitly step back from that starting point here, even as I repeat it to note that this series is at least as much about how Xi Jinping has changed in the crucible of his seeking to lead China too. He has had to change and adapt his vision and understanding, and both in response to forces and demands arising from within China and from those arising from the outside world as well. The later source of influencing forces and pressures has included in it at least some factors that have been predictable and certainly categorically if not always in detail. But some of the most consequential of the events and emerging forces that Xi has faced have also been disruptively unexpected and unpredictable too, and even in general terms.

That includes factors such as the “predictably chaotic unpredictability” coming out of Pyongyang and North Korea’s government, as led by number three in the Kim family dynasty there: Kim Jong Un. And that disruptive chaos has become particularly irksome as North Korea has developed progressively more advanced nuclear weapons and ballistic missiles and as it has become more aggressive in asserting its independence from China and their strategic needs, and certainly regionally in Asia. But more importantly, this includes factors such as the election of Donald Trump as president of the United States.

When I first began writing of the impact of Donald Trump United States presidency on China and on Xi’s leadership there, in Part 39: rethinking China’s emerging trends and challenges in the emerging era of a United States Trump presidency, I had disruption and uncertainty in mind, and certainly as Xi would seek to plan for stability and both in his country and in his leadership there (and also see Part 40 and Part 41.) President Trump and his brand of chaos and in essentially all areas and arenas that he has influenced at all, have had significant impact and both within the United States and globally as well.

But uncertainty coming out of the US White House, and the risk potential that creates is only one element that a Trump presidency all but compels Xi Jinping to face and respond to. The other really significant element to that, that I would address here is a direct cause and effect consequence of that chaos and uncertainty: a sudden globally impactful power vacuum that a failing and ineffectual Trump presidency is creating, where the United States was a stable source of strength, and globally until Donald Trump’s election and inauguration.

Much of what Xi has faced in China and in his dealings with the world at large are unchanged by this turn of events, and certainly as of this writing at just over 100 days into the Trump presidency. But this power vacuum creates opportunity for Xi and I add for a great many other national leaders and their governments, even as it hinders and concerns others (such as the leadership of America’s traditional allies.) And this brings me to reassess China and where it is headed as a nation, as Xi faces new and disruptively unexpected opportunity as well as risk.

Let’s consider where this new and emerging context is being built from, from a China perspective. And I begin with a consideration of Xi and his agenda and then move on from there to consider China as a whole.

Does Xi Jinping still seek to be Mao Zedong’s one true successor in absolute power in China, and in a way that none of Mao’s successors in Communist Party leadership have been able to even approach? I would contend that the answer to that is still an emphatic yes, and perhaps now more so than ever. Xi clearly sees himself as China’s one and only truly indispensible man and the only person in China who can successfully navigate the troubled and uncertain currents that his nation now faces. Mao was The Great Helmsman in his day and Xi, whether he would use that identifying term or not, sees himself as China’s one true helmsman now in this still early 21st century and with all of the challenges that have been emerging, including ones that have long festered and that are now coming to a head. And he sees himself as the one person who could best lead China in the face of a Donald Trump American presidency.

And if he can succeed in gaining value for China from his dealings with Trump, by a combination of flattery for Trump’s ego and shrewd negotiations in managing the details with Secretary of State Tillerson and others, that would greatly increase his chances of succeeding in staying in office for a third term as leader of China’s Communist Party’s Politburo Standing Committee, and as such of their Communist Party and government as a whole.

A Trump presidency per se cannot alter, let alone eliminate China’s internal challenges, that I have been writing about for years now. So China’s economy is still in many respects a Potemkin village, to use the old Tsarist Russian term, as repurposed and continued under Soviet Communist rule; it is a convenient and attractive fiction in many respects and certainly when its purported underpinnings and its actual fundamentals are considered.

• Their Party bureaucracy is still both powerful and corrupt and inefficient, and tremendously locally self-serving.
• Their centrally managed open and official economy is still burdened by the ongoing presence of a vast black market and related underground economy, and a gray market economy that connect it to their open and official one.
• The most powerful people in China: their top 1% and top 1% of 1% benefit from and even actively support their black and gray economies and to their own personal benefit and even as they run their country. As just one indicator of this, wealth inequality and the flight of privately held wealth out of China and into foreign investments and savings, and into stronger and more stable currencies continues. And China continues to try to control the recognized value of its own currency to reduce the incentive driving this wealth flight, among other problems faced.

And for once this effort has started to actually work for them, at least according to early indicators. See, for example:

Trump Isn’t Wrong on China Currency Manipulation, Just Late.

China has been spending down their foreign currency reserves at a furious and I add completely unsustainable rate to visibly prop up its currency, the Renminbi and its economy as whole. But since the Trump election, they have actually started to build up their foreign currency reserves again. Uncertainty coming from the United States and its leadership can have a positive effect as well as a negative one depending on where you look for impact. See:

China Stanches Flow of Money Out of the Country, Data Suggests.

I have written a number of times in this series of China’ efforts to take hegemonic control over the East and South China Seas and simply note that this effort continues unabated. In fact it is likely that a weak and uncertain Trump presidency, with a disorganized foreign policy that is more ad hoc than anything else, will strengthen China’s hand there. But my intent here is not to focus on China’s foreign policy as it plays out in this one more local region. It is to at least briefly consider China’s growing opportunity for global reach and strength, that this new power vacuum has created. And I cite a recent as of this writing, news stories that both verifies what I am stating here, and shows that Xi is very intentionally, very consciously seeking to fill that gap: that power vacuum with a China alternative:

Behind China’s $1 Trillion Plan to Shake Up the Economic Order and
Xi Jinping Positions China at Center of New Economic Order.

China’s fundamental inefficiencies have not gone away and have not even changed and certainly not in any fundamental sense. But a Trump presidency and the seismic shifting in the world order that this has created, has given China and their system of government and their economy a whole new lease on life where they had been unsustainably propping up their economy and their system as a whole and with limits as to how long they could sustain that. A Trump presidency, to be more specific here, has given Xi Jinping a whole new springboard for both maintaining and even elevating his power and authority and both within China and on a world stage. And he is already actively capitalizing on that. What I am writing of here, is a fundamental turning point for China and for Xi as their leader.

Donald Trump may or may not remain in office, with the possibilities of impeachment dogging his every step even if he does manage to avoid its actual realization. But Xi is now much more likely to stay in power and for longer than anyone would have expected, and certainly when I first began writing about him in this blog.

I will follow up on this with a next installment, in approximately two weeks. And in anticipation of that, I expect to focus on infrastructure development in that posting. Meanwhile, you can find this entire series and all of its postings at Macroeconomics and Business as postings 154 and loosely following for Parts 1-12 and for a supplemental posting: Part 12.5. And see Page 2 to that directory for subsequent main sequence and supplemental installments to this. You can also find other, China-related postings and series at those directory pages, and at Ubiquitous Computing and Communications – everywhere all the time too. (And as a time stamp, I wrote this as a single draft on May 14, 2017.)

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