Platt Perspective on Business and Technology

Some thoughts concerning a general theory of business 18: considering first steps toward developing a general theory of business 10

Posted in blogs and marketing, reexamining the fundamentals by Timothy Platt on October 17, 2017

This is my 18th installment to a series on general theories of business, and on what general theory means as a matter of underlying principle and in this specific context (see Reexamining the Fundamentals directory, Section VI for Parts 1-17.)

I began addressing one side to a commonly encountered workplace dynamic in Part 17, which I restate here for purposes of narrative continuity:

• As beginning, with the individual job seeker and career developer, and the hiring and promotion-directed strategies that they follow when seeking out a new job opportunity,
• And ending with the approaches that those same individuals follow when actually working at a business after achieving their next step goals in this.
• And as part of that, I will also consider the strategies and the tactics of others who work with them or who otherwise become stakeholders to these transaction flows (games.) This obviously has to include the hiring manager who would act as gatekeeper in bringing or not bringing them into this business as a new hire, and I will at least start discussing their role here when addressing the issues of the would-be employee themselves, but it of necessity also has to include a wide range of others as well. And I will address them and their issues here too, in this series.

I said that I would address this list of issues, starting at the top, from the perspectives of both the would-be hire and then ongoing in-house employee, and from that of the hiring manager who in most cases becomes their workplace supervisor once they are brought in and onboarded as an employee. I would treat in-house promotions in this sense as in-house hirings, and certainly when those seeking promotion do so in competition with would-be hires from the outside. But setting that specific case scenario aside for the moment, I said that I would address all of this from both the new hands-on non-managerial employee perspective, and the new-hire manager perspective as well. And as just repeated, I said that I would at least begin to discuss all of this from the perspective of a wider range of stakeholders who would be affected here too and from the interviewing process on.

I began all of this in Part 17, focusing on the pre-hire job candidate and the hiring manager who eventually selects them and offers them a job. And I finished that installment at the point of hire, stating that I would continue from there in this posting from day one as a new in-house employee, and how perspectives change and for both the new hire and for their manager and for other stakeholders involved there.

• When a would-be employee, seeking a new job applies for work, they essentially always arrive as largely unknown commodities for consideration, and for all details as to who they are and what they are like to work with and regarding how well they work, that cannot be captured in a resume or cover letter, or in brief and highly choreographed interviews. And given the dynamics of the hiring process and certainly as they are shaped by the flood of often largely irrelevant resume submissions sent out en mass to all hiring businesses, the basic goal from the hiring side in this is largely one of weeding out and eliminating wrong candidates, and not on finding reasons to hire what might be good ones (see Part 17 for a more detailed discussion of background issues relevant to this assertion,)
• There are exceptions to that more general approach of course, and certainly when a business specifically seeks out a particular possible new hire, who they might even court to try to entice them away from a current employer. But this is the basic pattern for all who send their resumes in on their own initiative, in response for example to online jobs postings.
• When a business does hire: when a hiring manager agrees to hire a particular job candidate, making that commitment on behalf of their employer and on behalf of the team they supervise that this new hire would join, the dynamics of this shift, and certainly as that new hire successfully completes their (usually at least approximately) 90 day probationary period, during which time they could be dismissed without a need for well argued justifying cause. Now the basic default is not to find justification not to have this person on payroll as an employee: it is to justify keeping them on and certainly if they do not behave in a manner that would make that explicitly untenable.
• A less than fully successful employee might never get a promotion, or a raise that goes beyond any required cost of living or related pay increases. And they might be among the first out of the door in the event of a downsizing, where dismissal would take place absent any onus of poor performance. But absent more special circumstance processes such as downsizings, an employee who at least meets their basic performance goals in their ongoing performance reviews is likely to stay on there, unless they choose to leave – or unless their job requirements and those of all others in their job category are changed in ways that they cannot even minimally successfully perform at.

All of these are business decisions that at least formally, ostensibly come from the business as an organizational whole and in accordance with its policies and practices as generally understood and carried out. But all of these decisions and actions are made and carried out by individuals who are balancing their own needs and their own agendas and their own workplace contexts in shaping them, as well as attempting to meet overall business needs as they individually perceive and understand them. And this includes addressing the needs and the desires and intentions of the people they report to and those of other stakeholders as well, and certainly where they wield power and influence in the business hierarchy and its networks of alliances that are in place.

Note that “business hierarchy” as used above, need not follow a simple linear, top-down command and control pattern, and many businesses disperse such authority and influence through more complex networks in actual practice, and even when the basic systems in place are presented as being top-down organized and run (e.g. as would be found in a military command structure as a perhaps extreme case in point example.) There, to pick up on that example, young Lieutenants would be foolish at the very least to not listen to their more experienced noncoms as sources of long-term experience and insight. Even good senior officers know when to listen to highly experienced, high ranking noncommissioned officers who in official practice report to them.

What I am doing here in this posting, is to at least briefly and selectively discuss the dynamics of agreement and of conflict, and connect and disconnect between the individual participant in these systems, and the overall organization and its needs and intent, as are variously understood throughout the business. And in that, and to repeat a point already made in this series, at least in passing, all of those individuals who work in that business, do so and see and understand “their” business from the perspectives of their own jobs and responsibilities there, and their day-to-day functional and organizational positions there.

I am going to continue this line of discussion in a next series installment where I will continue to flesh out the new hire to in-house employee transition scenario and start to more fully address the issues that a wider range of stakeholders bring to this transitional process. And I will explicitly discuss how all of this plays out (think game theory there) for non-managerial and for managerial level employees, executives included. And I will also, over the course of the next several installments, explicitly discuss promotions and both as carried out strictly in-house and as arise de facto from strategically moving on to work for a new employer where suitable job openings are not and cannot be available where an employee works now. In anticipation of that, I add here that I will frame this flow of discussion, at least in significant part in terms of two behavioral dynamics:

• Fear of the potential negatives of change and of the unknown, and focus on the positive possibilities of change and an embrace of the new and at least in-part unknown, as those job and career strategy-shaping presumptions arise and are followed and
• The potential for alignment and for discord when different stakeholder participants in a business interaction pursue different game theory strategies as they each attempt to reach their own goals.

Meanwhile, you can find this and related material about what I am attempting to do here at About this Blog and at Blogs and Marketing. And I include this series in my Reexamining the Fundamentals directory, as topics section VI there, where I offer related material regarding theory-based systems. And I also include this individual participant oriented subseries of this overall theory of business series in Page 3 of my Guide to Effective Job Search and Career Development, as a sequence of supplemental postings there.

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Technology as the tide that raises all boats 11 – but often unevenly 8

Posted in outsourcing and globalization, reexamining the fundamentals, strategy and planning by Timothy Platt on October 7, 2017

This is my 11th installment to a discussion that I initially began as a single stand-alone posting in April, 2012, but that needs reconsidering. I focused in that posting, on a key issue that enters into a determination of how and when change rises to a level of significance so as to qualify as true innovation (see Outsourcing and Globalization, postings 25 and loosely following for Parts 1-10, and Part 1 of that in particular as the foundational urtext for this narrative.)

The at-times conflicting dynamics of innovation entry into, and acceptance in the marketplace are crucially important to the narrative that I have been developing here in this series. So I explicitly addressed two of the more overtly significant aspects of that in Part 9 and Part 10:

• Availability and accessibility of New in the marketplace (at all, and at an affordable cost there),
• And level of comfort and of willingness to adapt New, and how soon after it first appears as a marketplace possibility.

My goal for this installment is to address something of the underlying mechanisms of these dynamics, and certainly in an increasingly ubiquitously connected context, with a focus here on friction in these systems. And in the course of discussing and analyzing that, I will explicitly consider how both cultural and socioeconomic forces impact upon and help to shape innovative change and the opportunity for it as it advances forward all around us.

I begin addressing all of that by posting a basic and even fundamental question, that I have in fact answered at least in part, a number of times in the course of developing and writing postings and series to this blog:

• What is friction in this context?
• I start with a well established approach to answering that: with friction as that term is used in economic theory and as a general organizing principle there. Economic friction is resistance to systems efficiency as that arises from a lack of essential information, clearly stated and available when and as needed. Friction is the consequence of having to make economic and financial decisions absent even crucially necessary information at the time of decision making, that would be required in order to knowingly make a best decision then. Think of this as sand thrown in the gear box of Adam Smith’s invisible hand, where marketplace and economic system participants cannot make what would be the best decisions for themselves or for others (who for example, they might hold fiduciary responsibility toward), as they lack the information and insight that would be required for that. Economic friction is a measure of the consequence of faulty and limited information and its communication and it shapes the overall systems that it arises in, and the outcomes and consequences of decisions made in them.
• I adapt that basic term and its definition to the organizational level of the individual business with a matching term: business systems friction. And I apply that term at the level of the overall business or organization as a whole, and at the level of functional and other supposedly tightly connected functional subsystems that arise within the complete organization (e.g. as separate and distinct lines on a table of organization under single lines of leadership there, or as separate and distinct offices or facilities that formally belong within the business but that also function at least somewhat autonomously within it.) Looking outward and in the other direction for organizational scale, I also apply this term in the context of supply chain and related value chain systems, with the functionally interconnected and interacting businesses that enter into them, all collectively brought under direct consideration here.
• And here and in this context, I continue expanding the range of organizational levels that I would apply the basic term “friction” to, to consider individuals and social network and marketplace connected groups of them. Yes, the basic issues that I would encapsulate in what I will say here and in this context, have their counterparts within businesses and in groups of employees, and I would tend to include that context within the general rubric of business systems friction too. Here, I will focus on what I will categorically carve out as a more consumer and marketplace manifestation of friction. (Yes, this could reasonably be folded into the general economic friction definition, but I separate it out to consider this set of phenomena from an explicitly more micro-level.)

Consumers and marketplace participants in general, make their decisions to purchase or not to purchase on the basis of limited information, and in the face of faulty and at times even significantly limited and even contradictory communications. This is obvious when considering rapidly changing industries and their products, where consumers do not for example necessarily know when a newer and better next technology updated product will come out as they make their next purchasing decisions now. It also applies to the questions of quality and reliability, ease of use, and value of the features offered, in what they have to consider for purchase and even when they know that a new purchasing option is available to them. That is why crowd sourced and other (presumably) consumer product reviews are considered to be so valuable as an increasing common due diligence resource, and for so many. But even then, how can you tell if a negative review is the legitimate expression of opinion of a real product user, or just a troll attack fraud and perhaps one posted in subversive support for a competitor? How can you tell if a glowingly positive review is legitimate, or a fraud too, and even one directly posted by the product manufacturer or provider, or posted for-fee on their behalf? Information is always going to be incomplete and imperfect. And it can be difficult and even impossible to know precisely what to make of the marketplace information and perceived knowledge that is visible and available, that could be applied to purchasing decisions.

But this tells only one half of the story that I would make note of here. For purposes of this narrative, the second half might be even more important: the asymmetry in both the information available to, and the levels and types of information accessed by individuals in the overall marketplace, depending on where they most comfortably fit into a relevant innovation acceptance diffusion curve.

I admit that I am offering a more stereotyped assessment here, but add in its defense that in this case that simply means accepting the basic functional definitions of terms like pioneer and early adaptor on one end of the scale, and late and last adaptors on the other.

• When a new product, and particularly a disruptively novel one first arrives in the marketplace, the first people to see it are often published new product reviewers who tend themselves to be early and even pioneer adaptors. And they focus on all of the new details and their strengths and weaknesses, but from a New accepting and even New-embracing perspective. Pioneer and early adaptors who are drawn to the New and Different, tend to be drawn to these reviews and to make their own reviews and assessments of the product details offered too, through online social media. So their decisions to buy in or not, tend to be granular and detailed and on a specific New product level. And they tend to be shared through like-minded communities.
• Late and last adaptors do not generally read these types of reviews – ever. And they do not in general post or share their specific reviews or opinions either, and certainly not online in the manner that early adaptors do. They start out with a presumptive, more categorical bias against New and Different per se, at least until value has been proven in others’ hands as safe and reliable enough to meet their due diligence requirements and on a “once new” by “once new” basis. So their approach here is essentially by definition anything but fine grained and granular in nature and it does not enter into widely shared review and evaluation conversations. Outside sourced information that they would seek out and accept in this, is in large part evaluated in terms of how it does or does not support their basic a priori conclusion-based due diligence approach which is more risk aversive than benefit accepting in nature.
• And mid-stage adaptors fit in the middle there, looking both outward for details of the specific products that have come out to see how they might work for them, and both outward and inward for threat assessment driven risk management decision making. They also want to see at least some prior user experience as necessary input for their risk and benefits evaluation, but they are not entirely driven by that in their purchasing and usage decisions.
• That raises an important point. Both early and earliest, and late and last adaptors carry out risk and benefits assessments (and so do middle ground adaptors.) It is just that early end of the spectrum adaptors tend to weigh possible benefits more heavily than they do risks and late and last adaptors tend to reverse that. For a very real world, clarifying example there, consider government agencies such as the United States FBI and particularly when they seek to upgrade their computer network and file and data management systems. They do in fact look into the technical details and in more detail than essentially any early adaptors would or could. It is just that by the time they have finished their multi-stage vetting process for that, what began as new and cutting edge can have become old and even obsolete. This is not a fictionalized example; I am in fact briefly recalling a specific failed attempt at a massive, information systems upgrade in the FBI that collapsed around the time I first began writing to this blog. Possible risk was viewed as so outweighing possible benefit that nothing positive was, or could be achieved from that upgrade attempt, that ended up costing the US government well over a third of a billion dollars and with nothing to show from it in the way of new technology in place and in actual use.

There are a number of salient conclusions that could be drawn from this comparison between early end and late end adaptors as considered from an innovation diffusion and acceptance curve perspective. One that I would point to here is that most late adaptors seek out much less outside information and much less new product-specific information than do early adaptors ( my FBI example notwithstanding, as a perhaps rule-clarifying exception.) And this difference in the levels and range of sources of information sought out, and of the range of conversation flows entered into, mean fundamental differences in the types and sources of friction faced when making these purchasing decisions, and when determining the timing of those decisions, for those two groups.

I said towards the top of this posting that I will consider “both cultural and socioeconomic impact as innovative change and the opportunity for it advances all around us.” I will more explicitly delve into those issues and into the issues of early and late adapting communities in my next series installment. I simply add here and in anticipation of that, that this set of issues becomes definingly important in a ubiquitously connected, social media driven context that we now live in. (I will question that assertion in my next installment too, as part of its discussion.)

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. I also include this in Outsourcing and Globalization – and see that directory for related material. And I include a link to this posting as a supplemental addition to Section VII: Reexamining Business School Fundamentals (reconsidered), of Reexamining the Fundamentals too.

Some thoughts concerning a general theory of business 17: considering first steps toward developing a general theory of business 9

This is my 17th installment to a series on general theories of business, and on what general theory means as a matter of underlying principle and in this specific context (see Reexamining the Fundamentals directory, Section VI for Parts 1-16.)

I began this series with a discussion of general theories and what they consist of, as a matter of general organizing principle (see Parts 1-8.) And after laying a foundation in that, for focusing in on a general theory of business as a special case, I began addressing the more specific intended topic of this series as laid out in its title. And I have focused essentially entirely since then on the organizational level of the business as a whole. I then switched orientation, and level of organization in Part 16, to consider business theory from the perspective of the individual participant in these systems. I offered Part 16 as a whole, as an orienting start to that discussion thread, and in the course of that offered two basic approaches that can be and that frequently are pursued:

• That of the entrepreneur who takes a more consultant approach to their work and to dealing with their employer,
• And that of an employee who in effect leaves their own longer-term jobs and career planning to their employer and in the hands of the people who they report to there.

I at least briefly argued a case for pursuing the first of these approaches but acknowledged both, and a need for a general theory of business to accommodate and include both as well. And with that stated, I offered a brief to-address list of points in Part 16 that categorically list how different types of stakeholders would participate in business systems. And I added that I will at least begin to address those topic points here, which I repeat for purposes of continuity, considering businesses:

1. From the perspective of the individual employee, whether hands-on and non-managerial or managerial, or executive or owner, and with consideration of a still wider range of stakeholder types as well.
2. From the perspective of how each of these groups of stakeholders see themselves and other stakeholder types, and in both risk and benefits, risk management terms and in game theory terms,
3. And according to how the members of these groups see themselves as strictly in-house employees with their leaving their longer-term planning in the hands of their employers, or as more independent entrepreneurs and consultants who take direct ownership over and responsibility for their own work and career planning and its execution.

And I said that I would begin doing so by way of offering an orienting scenario, which I framed in general terms that “begins with the individual career developer and the hiring and promotion-directed strategies that they follow, and ends with the approaches that those same individuals follow when actually working at a business. And as part of that, I will also consider the strategies and the tactics of others who work with them or who otherwise become stakeholders to these transaction flows (games.)” And I said that I will approach this from both the individual and the business perspective. I begin that here.

When you are looking for a new job and you put at least a measure of thought and effort into that proposition, you seek to find an organization to work at in which you can gain value for yourself in meeting your own needs, while offering value in return that would make you an attractive hire and a valued employee. This means you’re having and effectively presenting skills and experience that you would want to use and build upon in a next job and as you pursue further development of your overall career. And it means presenting them to potential employers who would find value to themselves and to their enterprises, in what you can demonstrably do.

This is not a friction-free system and particularly in an age and an employment context where so many would-be job seekers send out hundreds and even thousands of copies of the same generic resumes electronically, at no cost or additional effort on their part to essentially every business that might be hiring that fits within what might be a very vaguely defined target audience. The result is that essentially all hiring businesses these days, push all resumes received into digitalized database systems and effectively filter out and discard all that do not meet the initial screening criteria of automated search queries. No human ever reads the vast majority of the flood of what is essentially spam and background static that goes into those systems, and all of the submissions that are received that do not make any first cuts, is generally mass-deleted after some set period of time in limbo in them, never to be considered there again.

I would argue, in a more explicitly jobs and career best practices context that this means we should all be more focused in what we submit and where, and that we need to know and use the same wording that the businesses that we would apply to, use in their posted job descriptions that we would apply to, and both for the skills and experience that we offer and for precisely how we phrase them. From a business theory perspective, I focus here on how the hiring process takes place in the context of what communications theory would refer to as noisy channels that are filled with background static, and in a context that I refer to (in more economics theory terms) as being limited by business systems friction.

This flood of often and even usually non sequitur resumes would overwhelm the hiring process if it were not for automated, database screening filters. That work-around can and does add entirely new forms of constraint on those who seek to find work and certainly for any position that is not entry-level or otherwise highly standardized. I write here of the emerging 21st (and undoubtedly beyond) context that hiring now takes place in and increasing as a universally applicable source of constraints and for any job offering that would draw in wide ranging interest and response of any type.

If as a job seeker, you send out enough copies of your e-resume to enough businesses you will probably, eventually get something of a response – but the level of chance in where that comes from and in what you might achieve as a next job out of that will be very limited, and certainly insofar as you would seek to strategically pursue a longer-term career and advance in what you do. So I will presume in what follows that you take more of a planned approach, as I discuss in my Guide to Effective Job Search and Career Development in its postings and series (see its Page 1, Page 2 and Page 3 listings.) And I presume that any hiring manager and other stakeholders who screen and select applicants, and who help determine who a final selection hire will be, are equally systematic in their hiring processes and decision making too.

• Basic underlying assumptions made are important. And I assume here, as an at least for-now axiomatic assumption that the people on both sides of a potential hiring process are following something of an at least relatively consistent and rigorous logic in what they do and how, and that they act accordingly.

This is very important. I will delve into the issues of reductionism and of emergent properties and processes as they arise at higher levels of organization, later on in this series and in some detail for that. But hiring new employees and I add the management of ongoing employees at a business is always carried out by individual people, and even if and when they do follow detailed strategically organized approved business-wide operational processes and procedures.

There is a dynamic balance in that. Most hiring managers in general, do seek to pursue courses that would benefit the businesses that they work for. But at the same time, they also seek to take actions that would facilitate their own personal success in their jobs too, and ones that would help them to advance their own careers, and to maximize their own job security and their own compensation received for what they do in the process. And they interpret what is best for their employer at least in part in terms of that.

The people on both sides of a hiring process participate in it as individuals, and even when they are also serving as agents for the hiring business when on the hiring side of that table. And this enters into their thinking and into their decision making, and both as they perceive and evaluate possible risk and possible benefit as they make their hiring decisions. And this shapes any emergent, higher level organizational factors (e.g. the overall business side to hiring here) that they might enter into.

Turning back to consider the employee side of this again, this addresses the emerging situation for employee participation in a business up to the point when they are first hired. Now let’s assume for purposes of continuity of discussion, that they prove themselves as a best candidate, are offered the job and accept it for the terms of employment and of compensation offered. I am going to switch directions in my next series installment here, and consider this narrative from their day one as a new hire, and how perspectives change, and for both the new hire and for their manager and other stakeholders involved. In the course of that, I will begin to more explicitly discuss the issues raised in the three numbered to-address points listed at the top of this posting.

Meanwhile, you can find this and related material about what I am attempting to do here at About this Blog and at Blogs and Marketing. And I include this series in my Reexamining the Fundamentals directory, as topics section VI there, where I offer related material regarding theory-based systems. And I also include this individual participant oriented subseries of this overall theory of business series in Page 3 of my Guide to Effective Job Search and Career Development, as a sequence of supplemental postings there.

Technology as the tide that raises all boats 10 – but often unevenly 7

Posted in outsourcing and globalization, reexamining the fundamentals, strategy and planning by Timothy Platt on August 28, 2017

This is my 10th installment to a discussion that I initially began as a single stand-alone posting in April, 2012, but that needs reconsidering. I focused in that posting, on a key issue that enters into a determination of how and when change rises to a level of significance so as to qualify as true innovation (see Outsourcing and Globalization, postings 25 and loosely following for Parts 1-9, and Part 1 of that in particular as the foundational urtext for this narrative.)

I focused in Part 9 of this, on the impact of globalization on innovation, as inexpensive and readily available ubiquitously connecting anywhere-to-anywhere communications and information sharing have broken down so many of the barriers between what were once separate marketplaces and buyer communities.

And in the course of discussing that perspective, I at least briefly made note of how this has contributed to a speeding up of innovation and its emergence in the marketplace as new product and service offerings arise and can find viable niche markets. And I added in that context that a speeding up of the pace of innovation and of what is now becoming available, is pressuring everyone to shift towards more rapid acceptance of change, foreshortening the innovation acceptance diffusion curve and challenging and even threatening those who would normally fit towards the late and last adaptor end of the curve. Quite simply, late and last adaptor now means falling further behind the more median acceptance rate norm than it used to, and even much further behind for the extreme late end of the new technology diffusion acceptance curve.

As a point of perspective, even if an imperfect one, I would compare this emerging trend to the still-wide digital divide that separates new and emerging technology have and have-not communities. But the divide that I write of here, is not one where new and next are access-restricted and regardless of desire to actively participate in and use new and emerging technologies with the empowerment that they could bring. This divide is one where new and next are increasingly, seemingly forced on everyone and whether they are prepared for it or not.

I cite the digital divide here, as usually depicted in an international, have and have-not nation context, for a reason. In practice, have-not communities and left-behind ones can be found in even the more technologically advanced have-oriented, developed nations and certainly when you consider communities that were built up around what have become obsolete technologies and that have suffered economically as a result. Consider the so called rust belt communities of the United States and the old coal mining communities in states such as West Virginia. The two divides that I write of here, can and do go hand in hand in many places, where a combination of lack of access, and fear of further change can create a truly toxic synergy.

To put that more general observation, in the specific perspective of a still in-the-news context that is playing out in the United States as I write this:

• How much of the “conservative” and “ultra-conservative” versus “liberal” and “progressive” debate, and even conflict that we now see, actually reflects a division in how different demographics can or cannot readily accommodate change, and a steady barrage of it and from seemingly all directions, all the time? Remember how one of the clarion calls of disaffection of Donald Trump’s followers is their yearning to return to simpler times and to the way things used to be – when the world was more familiar and less disruptively changing.

I wrote in Part 9 of the pressures of rapid innovative change in what is offered in the marketplace, and the pressures that this places on consumers to accept and adapt and to change too, and both as individuals and as members of communities. I counter that here with a matching discussion of pushback and even overt resistance to that demand for change, that can be in part shaped by availability of New but that is even more driven by resistance to being changed, and certainly where that would be viewed as being coerced.

I wrote Part 9 in terms of balances between competing forces and drives, and I continue that same basic narrative approach here. The marketplace and its participants always face competing pressures and demands, and competing needs. This means they are always facing dynamic balances of competing forces and both around them and within them as they make their purchasing and usage decisions. And this brings me to a fundamental point that underlies much if not all of this series and its progression of discussion and analysis: the phenomenon of friction in all of this, as it shapes both the rate and direction in which these dynamic balances of forces play out.

I will discuss friction as I use that term here, in my next series installment, where I will consider both cultural and socioeconomic impact as innovative change and the opportunity for it advances all around us. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. I also include this in Outsourcing and Globalization – and see that directory for related material. And I include a link to this posting as a supplemental addition to Section VII: Reexamining Business School Fundamentals (reconsidered), of Reexamining the Fundamentals too.

Some thoughts concerning a general theory of business 16: considering first steps toward developing a general theory of business 8

This is my 16th installment to a series on general theories of business, and on what general theory means as a matter of underlying principle and in this specific context (see Reexamining the Fundamentals directory, Section VI for Parts 1-15.)

I began this series with a discussion of general theories and what they consist of, as a matter of general organizing principle (see Parts 1-8.) And after laying a foundation in that, for focusing in on a general theory of business as a special case, I began addressing the more specific intended topic of this series as laid out in its title. And I have focused essentially entirely since then on the organizational level of the business as a whole, first treating these entities as if they were essentially monolithic in nature, and then opening the box a little to consider their functional and organizational structure too – at least at the level of granularity that would appear on a standard table of organization. But even there, my focus was on how they fit together and functioned together in collectively comprising the business organization as a whole.

As a matter of organizing this series and its narrative if nothing else, I have chosen to address this fundamentally single business level of conceptual organization as a baseline that I would organize the series as a whole around. And then in the course of writing Part 15, I stated that I would turn from that to:

1. Consider the basic issues raised and considered in this series, from the perspective of the individual business stakeholders.
2. And then I will expand the scale of consideration outward from that of the single complete business enterprise to consider supply chain and related value chain systems and I add, business and marketplace ecosystems.

I will, of course recurringly return to reconsider the baseline middle ground organizational level of the individual business organization, and both when focusing in on the individual and when telescoping out to consider the larger business and economic contexts, that businesses reside in and function in. But I offer this as a brief anticipatory outline of what is to follow.

I begin all of this with Point 1, as restated and reorganized from Part 15, above. And I begin that by at least briefly connecting what I will offer here, to a progression of series and individual postings that I have been offering in this blog as my Guide to Effective Job Search and Career Development (see its Page 1, Page 2 and Page 3 listings.)

My goal for that Guide is to offer what experience and insight that I can, on finding and securing jobs and working successfully in them, and both at the individual job and career step level and in an explicit career and overall career development context. I have worked with a fairly wide range of businesses and in a variety of industries and in a fairly wide range of types of positions, and I have actively sought out opportunity to learn from others in this. As such, I probably have seen first-hand and directly experienced a wider range of job and career possibilities than most. But I am still just a single individual and offer what I can there, as filtered through the biases and assumptions of my own experience. As such, I still offer a limited perspective there, and even if a relatively comprehensive one with over 550 short essays included in it as of this writing. But there are a few fundamental points of observation and experience that underlie all of that, that I would start from here as essentially axiomatic assumptions, going into this general theory discussion:

• Even when we work for a single employer as an in-house employee and throughout our work life, we should still think of ourselves as if we were consultants, who might find ourselves having to work with a next employer and a next consulting client as developing and emerging circumstances dictate. No job or job opportunity can safely be presumed to last forever, as a tacit and unconsidered assumption.
• An employing business and its underlying assumptions and sense of self-interest are separate and distinct from those of our own. And while our employment with such an enterprise might seem long-term and even open-ended, we can never assume that as an absolute given. Business employer, and personal employee needs and interests can come to differ and diverge and change, and even disruptive change in employment options and possibilities can arise.
• So always think of yourself at least in part as an independent consultant, even if you are working in-house and long-term with one “client” employer. And always think of yourself at least in part as an independent small business, and with your own needs: short-term and immediate, and long-term firmly and clearly in mind.

This is important, and I add this is a point of observation and of conclusion that underlies how I address Point 1 of the above list. Any general theory of business that seeks to address the organizational level of the individual needs to address this type of consideration, and both for those who are entrepreneurial (i.e. who take this approach) and for those who simply see themselves as someone else’s employee.

And with this in place, I offer here, an at least preliminary to-address list of Point 1 oriented issues and perspectives that I will delve into in this series as I consider its level of organization:

• From the perspective of the individual employee, whether hands-on and non-managerial or managerial, or executive or owner, and with consideration of a still wider range of stakeholder types as well.
• From the perspective of how each of these groups of stakeholders see themselves and other stakeholder types, and in both risk and benefits, risk management terms and in game theory terms,
• And according to how the members of these groups see themselves as strictly in-house employees with their leaving their longer-term planning in the hands of their employers, or as more independent entrepreneurs and consultants who take direct ownership over and responsibility for their own work and career planning and its execution.

I am going to begin addressing these points and their issues in my next installment to this series, with a discussion grounding scenario that begins with the individual career developer and the hiring and promotion-directed strategies that they follow, and ends with the approaches that those same individuals follow when actually working at a business. And as part of that, I will also consider the strategies and the tactics of others who work with them or who otherwise become stakeholders to these transaction flows (games.) My goal there will be to ground a perhaps more abstract line of discussion in more real world jobs and careers terms, and with a more familiar experience-based foundation point that I will be able to refer back to while discussing Point 1 issues in general.

And I will discuss all of this from the perspective of:

• The individual as they work and plan and carry out their careers, and
• From the business process and execution side as individuals work to achieve goals and priorities and stretch goals and their priorities, in meeting business needs.

And as my goal here is to offer a general theory of business that would offer value in an emerging 21st century, and not just serve as a retrospective on the 20th century, I will of necessity also address:

• The issues of globalization here, where outsourcing is just one piece to that puzzle,
• And workplace automation, where a combination of artificial intelligence and robotization are reshaping what employment and even employability mean.

I am going to begin all of this in my next series installment, with the above-cited grounding scenario and will proceed from there to address in turn the rest of the issues noted here. Meanwhile, you can find this and related material about what I am attempting to do here at About this Blog and at Blogs and Marketing. And I include this series in my Reexamining the Fundamentals directory, as topics section VI there, where I offer related material regarding theory-based systems. And I also include this individual participant oriented subseries of this overall theory of business series in Page 3 of my Guide to Effective Job Search and Career Development, as a sequence of supplemental postings there.

Technology as the tide that raises all boats 9 – but often unevenly 6

This is my 9th installment to a discussion that I initially began as a single stand-alone posting in April, 2012, but that needs reconsidering. I focused in that posting, on a key issue that enters into a determination of how and when change rises to a level of significance so as to qualify as true innovation (see Outsourcing and Globalization, postings 25 and loosely following for Parts 1-8, and Part 1 of that in particular as the foundational urtext for this narrative.)

I focused in Part 8 of this, on the pace and scale of change and of innovation, considering two related but nevertheless categorically distinct arenas where innovation can take place:

1. Innovation within the business and in how it is structured and organized and in how it functions, operationally, and
2. Innovation in what that business brings to market as products and services offered.

My primary area of focus there was a continued discussion of the relative potential pace of change and of innovative change in particular and in both of these contexts. Then at the end of Part 8, I said that I would continue from it here, with explicit consideration of:

• Globalization and the scale of the marketplace, and its capacity to create and support progressively finer-scale niche markets even as it drives global conformity too, and
• The realities of the technology diffusion and acceptance curve, and of push-back pressures from the marketplace as they would serve to limit and shape the pace of accelerating innovation acceptance and of innovation occurrence as well, where technological factors alone might dictate faster and faster.

I begin this posting and its line of discussion with the first point and by acknowledging what should be obvious to essentially everyone, and everywhere now: a combination of ubiquitous, anywhere to anywhere communications and computer-supported connectivity and information sharing, has effectively limited the barriers that have traditionally divided us, and removed them entirely for many purposes.

• Since the advent of wireless telephony, and certainly since the advent of inexpensive, computationally powerful, readily available smart phones, globalization has meant all of us and everywhere at least significantly starting to come together as a single overall globally connected community.

China has its great firewall: its Golden Shield Project to try to limit and control the global conversation at least as far as it would include their own citizens. And at least some other nations actively seek to control their people, for their being able to join this conversation flow too. As an extreme case in point example of that, consider North Korea where all phone conversations are monitored, no average citizen has access to computers or the internet, and cell phones do not exist – except for a small and carefully monitored minority.

The more restricted the access to this globalization that the citizens of a country are, the more forcefully that country and its citizens are pushed into being de facto late and last adaptors to change taking place around them. The more openly connected a people are, the more visible and the more accessible the change taking place around them can be for them, and the more pressingly intrusive it can become too as new keeps rushing in to supplant current with next and with a still newer next after that. And this can serve to pressure people towards the faster adaptor end of the innovation acceptance diffusion curve.

I am going to return to that set of issues a bit later in this series. But let’s step back from it, at least for the moment to consider a key element to the first of the two topics bullet points offered above: scale in globalization. I wrote of two at least apparently conflicting drives in that bullet point that are emergent to globalization per se, and certainly in a ubiquitously connected context: its capacity to create and support progressively finer-scale niche markets and its drive to create global conformity too (as the dynamics behind the Pareto principle weed out perhaps many possible alternatives, leaving single “best” or at least most accepted alternatives predominating, and wherever change leads to possible diversity.)

When anyone and seemingly everyone who would potentially fit into and support a niche market can do so, it becomes possible to achieve a sufficient available consumer base for it, to make it feasible for businesses to produce and sell to it, in meeting its niche defined needs. And it becomes practical and feasible for businesses to actively pursue and meet the needs, and profitably so, for more finely, narrowly defined niche markets too. This in and of itself means support for diversity and for several and even many alternative product or service possibilities and all at once, each achieving real market success. But the forces behind that empirically observable diversity winnowing mechanism: the Pareto principle, keeps cutting back on at least widely available choice, at the same time with the emergence of market dominating winners too.

• Think of the balance of diversity and its supportive pressures, and of conformity in the form of Pareto principle winners,
• As representing the creative destruction dynamic, that is sometimes offered as a working definition of disruptive change per se. Old is swept away by change, and so are many and even most emerging change options too. And it is not always going to be apparent, and certainly not up-front, which particular new will thrive, or even which new possibilities will even survive as the flow of change advances.

And this brings me to the second of the above two topics bullet points, which I have in fact already begun to address when discussing and analyzing the issues of the first of them:

• The realities of the technology diffusion and acceptance curve, and the pressures of the marketplace that would limit and shape the pace of accelerating innovation acceptance and of innovation occurrence as well.

I am going to more fully discuss this and its implications in a next series installment. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. I also include this in Outsourcing and Globalization – and see that directory for related material. And I include a link to this posting as a supplemental addition to Section VII: Reexamining Business School Fundamentals (reconsidered), of Reexamining the Fundamentals too.

Some thoughts concerning a general theory of business 15: considering first steps toward developing a general theory of business 7

Posted in blogs and marketing, reexamining the fundamentals by Timothy Platt on June 13, 2017

This is my 15th installment to a series on general theories of business, and on what general theory means as a matter of underlying principle and in this specific context (see Reexamining the Fundamentals directory, Section VI for Parts 1-14.)

I began addressing business strategy and operations from a game theory perspective in Part 12 and Part 13 and continued that in Part 14, successively examining win-win, win-lose and mixed strategies and how they arise as best perceived approaches in business contexts. And my primary focus there was at the level of the complete business enterprise, as a more monolithic entity that would follow a single, if mutable strategy and game theory approach. I have at least touched on how different areas of a single business can pursue differing game theory-based approaches to meet their specific needs, and in support of a single overarching business strategy. But I have mostly focused on businesses as a whole there.

1. I am going to more explicitly consider how different areas of a single business can pursue differing game theory approaches, and even in support of a single shared business mission and vision and a single overarching strategy and business plan. And I will at least begin doing so here in this installment.
2. After that I will consider the basic issues raised and considered in this series, from the perspective of the individual employee, whether hands-on and non-managerial or managerial, or executive or owner. I add here that a still wider range of stakeholders has to be considered here so I will throw a wider net when delving into this set of issues, than would be included within the boundaries of any one organization.
3. And then I will expand the scale of consideration outward from that of the single complete business enterprise to consider supply chain and related value chain systems and I add, business and marketplace ecosystems. If Point 1 here addresses a baseline middle ground level of consideration, Point 2 focuses in to a deeper, finer grained level that underlies it and this Point 3 telescopes outward to consider the wider context that Point 2 issues take place in.

But I begin this at the organizational level of functional areas and separate offices and related facilities within a single business entity as they might pursue different mixes in an overall mixed game strategy approach.

I begin this with the fundamentals, as initially laid out in a complete business-as-single-unit context in Part 14, where I repeated how and why a business would pursue a win-win approach, and why it would preferentially find greater value and reduced risk from pursuing a win-lose approach:

• Win-win makes the most sense, offering higher overall value and reduced risk, long term when a business, or in the context of this posting, a unit or functionally distinct element of that business, faces long-term stability, and with reciprocity for value offered where it is shared. I couched this in supply chain and similar business-to-business collaborative contexts in earlier series installments as listed above, and in terms of business-to-market and business-to-customer dealings where positive value shared and offered lead to increased business and increased revenue and profits generated.
• This same basic paradigmatic model applies essentially entirely as-is, within businesses too and certainly when a functional unit or area under consideration is viewed as working with other areas of their own overall business as if in a supply chain system with them, and when they are viewed as serving the needs of a marketplace, and even if that means in-house clients and customers.
• Win-lose on the other hand, applies and both for entire businesses and for functionally separable units of them, when they enter into value creating transactional processes with other areas of a business that would only be expected to continue for a limited duration,
• Or that would be carried out under conditions of greater perceived risk and uncertainty as to how value would be exchanged (where that, for example can mean either uncertainty as to payout, or limitations to the overall pool of value that could be paid out that would not necessarily cover all value owed),
• Or for some combination of these win-lose oriented strategy-shaping constraints.

Win-win would probably seem fairly obvious as an approach within a business, and certainly when the success of any given unit or functional element in an enterprise is tightly linked to the success of the business it is part of as a whole, and to the success of all other areas of that larger entity. Where would you expect to see a more win-lose game strategy apply here? I have in fact discussed businesses and business contexts where win-lose is the only approach that would make sense within a business, on a number of occasions in assembling this blog. And I begin addressing this general area of consideration by citing a few of those relevant contexts here, at least in general terms:

• Consider the perhaps all too familiar situation in which a business has at most a limited level of some critical resource that would have to be shared by multiple employees and even by multiple here-competing teams or other units within a business (e.g. a single very expensive and costly to maintain piece of equipment that has become a functional bottleneck for the business as a whole, but that it cannot readily afford to buy more copies of.) Now consider what happens when the various business units and their managers and staffs compete for access to this one crucial resource and with all involved facing very tight completion deadlines for their work that calls for it, and with intense pressures from higher up on the table of organization for everyone to meet their performance goals and on time if not before then.
• Even if the business as a whole seeks to pursue a more purely win-win approach with other collaborating businesses, circumstances that would be difficult to fully control can bring units within it into more win-lose competition. And there, one of the goals of the leadership of such an enterprise would be to limit this, and to find a way to resolve the resource bottlenecks in place in their systems that engender it.
• As a second, in effect intentionally staged example of within-business win-lose competition, I cite an approach to business leadership that I have seen play out. Some business owners and executive leaders intentionally create competitive conflict between the people and the teams of employees and managers that work for them. And this can literally take the form of assigning the same exact goals to more than one individual or team and under terms where everyone involved knows that the winner of these races will be rewarded and the losers punished. Yes, this is toxic; some managers are toxic in how they lead and manage and through setting up win-lose conflicts that are at best only mildly damaging and certainly to morale and to achieving employee buy-in.

I offer that last example for a variety of reasons. First of all, I do so because it does in fact represent a real world within-business win-lose scenario that I have seen play out and even in businesses that by all outward appearance seem to be quite successful. And when other workplace factors are added in that would influence stay or go decision making on the part of employees caught up in these conflicts, this type of competition might not in and of itself lead to a real increase in key employee turnover either. So I am not necessarily citing this as a reason for change management becoming necessary: I am simply citing it as a challenging workplace environment where win-lose competition can become relatively commonplace and certainly on high priority projects.

Beyond that, I also cite this to note a point that should be obvious but that is often overlooked in discussion of business and management practices and processes: a truly general theory of business should address bad and questionable processes and practices and as thoroughly as good and best ones, and how they related to each other and how they would be distinguished from each other.

I am going to continue this discussion and addressing those issues in a next series installment, where I will turn to consider the second numbered point of my above repeated to-address list, and the individual employee, manager, executive or owner and their issues.

In anticipation of that and as a closing comment to my perhaps toxic seeming second win-lose competition example from above, I briefly recount an in-house competition that I have seen and participated in, in a differently run business, which for purposes of this narrative, I identify as an up and coming high tech firm: Alweron Inc.

• Alweron took on a major project as the successful bidder in a competition held by a national government agency. And the initial project proposal that they offered did in fact fit entirely within their current technology and technical solutions comfort zone, which is why they were able to bid to complete at the cost and within the timeframe that they offered.
• Then, as sometimes happens and certainly in a cutting edge technology context, the lead project manager and their team assigned to this work, ran into a roadblock, where they came to realize that a key element of their solution could not be made to work, at least with what for them was their currently available off the shelf technology.
• They got creative and in effect held an in-house stretch-goals contest, coming out of a company-wide brainstorming session that all employees and managers could participate in, as they sought to arrive at a best approach for resolving this impasse. And three teams came together, each attempting to solve this problem with a different, novel innovative solution that they had initially sketched out in principle in that brainstorming session. The winner of this contest would be rewarded with extra vacation days that year and with a cash bonus, upon delivery of their working solution, and with the first to cross this finish line with a cost-effective problem resolution declared to be the winner. Early delivery, ahead of the designated and agreed to deadline for completion, would mean a larger bonus too, as this would help the business as a whole to complete the overall project ahead of schedule and achieve an early completion bonus from the agency that was paying for this project to be done in the first place.

This was as much a win-lose scenario situation, as is presented in the above outlined more toxically presented in-house competition scenario. But rather than being set up to pit employees and teams against each other, to keep everyone a bit scared of possible failure to perform and succeed, this win-lose contest was organized and run to encourage out of the box creativity, and with bonus and longer-term career enhancement potential. The overall orientation of this was positive, rather than negative and affirming rather than threatening.

I am going to discuss business processes and practices from the perspective of the individuals involved, with a focus on assumptions made and the contexts that decisions and their follow-through are made in. Here, to note a point of difference between these two in-house competitions, both of them were set up as competitions between employees and groups of them that would see themselves as opponents to each other. But the second of them was not set up in such a way as to make this a basic workplace norm. And it was not set up with a goal of bringing employees and managers there to see each other as opponents, and even at least potentially as enemies in a drive to meet senior executive and owner expectations. A general theory of business has to include and both descriptively and predictively explain that too.

Meanwhile, you can find this and related material about what I am attempting to do here at About this Blog and at Blogs and Marketing. And I include this series in my Reexamining the Fundamentals directory, as topics section VI there, where I offer related material regarding theory-based systems.

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.

Technology as the tide that raises all boats 8 – but often unevenly 5

This is my 8th installment to a discussion that I initially began as a single stand-alone posting in April, 2012, but that needs reconsidering. I focused in that posting, on a key issue that enters into a determination of how and when change rises to a level of significance so as to qualify as true innovation (see Outsourcing and Globalization, postings 25 and loosely following for Parts 1-7, and Part 1 of that in particular as the foundational urtext for this narrative.)

I have been at least touching upon a succession of issues in this series, that address the question of what qualifies as true innovation, and certainly in a changing product or service development context, and a change-demanding marketplace context. And that progression of postings has led me back to this series’ Part 1 and its issues, and to the puzzle of economy of scale in enabling innovation.

Business scalability and the processes and complications of actually pursuing that course have provided a recurring thread of discussion that has run through much of this blog. And in that regard, I cite a relatively lengthy series that I first started posting to this blog on July 8, 2012: Moving Past Early Stage and the Challenge of Scalability (see Startups and Early Stage Businesses, postings 96 and loosely following for its Parts 1-35.)

I decided to put that series in a directory devoted primarily to discussion of startups and early stage businesses, knowing from the beginning that I would address issues in it that would only arise well after any early stages in a business’ growth and development. And I chose to do that because I see scalability and the systematic growth and development of a business as a fundamentally strategically driven ongoing process – and as one that would best be planned for and prepared for from the beginning, and from the initial formally developed business plan in place.

I make note of that essentially-editorial decision here, in order to stress how strategically positioned the issues that I have been addressing in this series are, and to emphasize that point in particular here in this installment to it. And with that noted, I turn here to focus on one particular aspect of the complex change-driving process of scaling up a business:

• Innovation and the ongoing effort to innovate in order to keep a business as competitively strong and efficient as possible while growing it in overall scale.

For purposes of this series, I parse innovation here into two separate but nevertheless connected and interacting domains:

1. Innovation within the business and in how it is structured and organized and in how it functions, operationally, and
2. Innovation in what that business brings to market as products and services offered.

Part 1 of this series focused essentially entirely on the second of these visions of innovation, and on how the scale of change in what is brought to market changes over time, requiring larger and larger incremental increases in market-perceived value for any given change to be seen as a genuine innovation by purchasing consumers and end users. I begin this posting’s discussion by noting that the more competitively efficient and effective the businesses in an industry become on average and as a general rule, the more difficult it becomes to find and institute a new and novel next-step business process improvement in any of them that would rise to a level of significance so as to qualify as being truly game-changing and innovative too. Simple evolutionary change in what is already more routinely being done is very unlikely to qualify as truly innovative in this context and certainly in a fast-paced and competitive industry or sector – and even if essentially any change that offers increased value to a business would qualify as being truly innovative in a more settled and moribund one.

Setting aside consideration of older and more static industries and of markets that show no real change except perhaps shrinkage, and focusing on actively developing industries and their markets here:

• The more and the more rapidly the businesses in those industries change in order to keep up and push ahead, the larger and more pronounced a new next step change has to be for them, if it is to stand out as representing a new source of genuinely innovative value.

I briefly touched upon this concluding point in Part 7 and expand upon it here, with some organizing explanatory detail added, as this is an important consideration in understanding business innovation per se. I write fairly extensively about innovation here in this blog, and this has been a very important point of focus in my own professional life. I explicitly note here, how

• Next-step and next-step after that innovation becomes more and more challenging and particularly in rapidly changing markets with change-demanding target audiences and consumer bases, and for any businesses that seek to service their needs.

I add that it can and usually does become more expensive and more resource demanding to innovate over time too. And real innovative change comes more and more from disruptive change with anything less than that: anything seen as merely evolutionary and incremental in nature, simply seen as being more cosmetic in nature.

That stated, let’s reconsider the two numbered points as offered above, starting with the first of them. Point 1 is very generally stated, and could only be addressed in general terms in a much more extensive discussion than I am developing in this series as a whole, so I focus on one particularly relevant aspect of that line of enquiry here, restating that in the particular, more-limited context of this series:

• I am writing here, at least in the within-business context of innovation, about developing new capabilities and resiliencies into a business that would enable it to offer to market, the same or better products and/or services, or a larger and more comprehensive array of them or all of the above, at lower and more competitive price points than the competition can match.

Ultimately, a business survives let alone thrives on the basis of its being able to produce and bring to market something that consumers will want, and want enough to pay for. This leads to the revenue streams that pay their bills and that allow for and support all else. Competitive strength and capacity to retain and even expand market share, and retain and even grow incoming revenue and profitability depend essentially entirely on that business’ capacity to produce and ship out and sell. And impact upon this, net of costs of implementation and of any new risk incurred, is where the value of any business process or other internal-to-the-business, change and innovation would be measured.

What have I been writing about in this series? As new forms and channels of communications and connectivity arise and as markets become more and more globally reaching and immediately so, the rate of change in those markets and pressure to innovate and improve in businesses facing them increases and increases and increases.

• And the timing and pace demanded for new and next in product development cycles keeps shortening too,
• And for all but the most dead-end, moribund industries that are essentially entirely driven by legacy technologies – until they are disruptively challenged by unexpected disruptive innovation too or until they simply disappear.
• And this speeding up of change and innovation in advancing industries,
• And this speeding up of how pressure arises, that compels that change, and of the forces that drive it, serve to create what might be considered a pace-slowing back-pressure through demands that any next incremental innovative change has to be that much larger in scale to even qualify as representing true innovation at all.
• Some might see this as a source of friction, and of information development and availability issues. And challenges of the type that lead to economic friction, and more locally to business process friction do enter into this. But friction per se and its consideration, only address part of this phenomenon so I use a different term here.

And this brings me to a commonly cited technology development scenario that has been proposed by many now in various forms when predicting where change and innovation and its recurrence are bringing us: the concept of the technology development singularity. For a now somewhat dated but still interesting and informative benchmark document on this conceptual understanding and on what it means, see

• Kurzweil, R. (2005) The Singularity Is Near: when humans transcend biology. Penguin Books.

More recent variations on the approaching singularity concept have focused on the emergence and realization of specific technology development benchmarks such as the development of true, generalized artificial intelligence that matches and then advances to exceed average human intelligence – and then presumably any realized level of intelligence that any person might display and even as true genius. This would presumably mean technology in effect coming to take over its own development and at paces that humans could not achieve let alone maintain on their own.

If you were to graph the pace of innovation development over time, these conceptual models would start out with innovation developing and the curve representing that, rising slowly and even very slowly and over generations per innovative step. But the pace of change keeps speeding up and even if slowly at first, and certainly until the first industrial revolution. Then the pace speeds up even more and until an inflection point is reached as the pace of advancement finally reaches a turning point. Such a graph is commonly depicted as taking the form of one arm of a hyperbolic curve. And we have in fact reached such a turning point with the pace of innovative change much steeper now than it has ever been historically. What I am writing of here is a breaking force, or back-pressure to repeat a metaphorical term already employed here that would prevent that curve from ever too closely approaching the vertical of essentially infinitely fast change – which I would expect any futurologist: Kurzweil included would see as a cartoon description anyway.

I am going to continue this discussion in a next series installment with at least two areas of discussion still to address in it:

• Globalization and the scale of the marketplace, and its capacity to create and support progressively finer-scale niche markets even as it drives global conformity too, and
• The realities of the technology diffusion and acceptance curve, and the pressures of the marketplace that would limit and shape the pace of accelerating innovation acceptance and of innovation occurrence as well.

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. I also include this in Outsourcing and Globalization – and see that directory for related material. And I include a link to this posting as a supplemental addition to Section VII: Reexamining Business School Fundamentals (reconsidered), of Reexamining the Fundamentals too.

There aren’t any good cold call marketing or sales campaigns anymore: some thoughts concerning general principles

Posted in reexamining the fundamentals, social networking and business by Timothy Platt on May 14, 2017

There are a set of basic principles that keeping proving themselves as relevant and even compellingly so and across wide ranges of potential application. They usually more commonly arise in discussion in specific specialized contexts, but the principles that underlie them keep coming up and in a diverse range of otherwise seemingly unrelated contexts and circumstances besides the ones that they might be best known for. And one of them that is more commonly expressed in a more monetary theory-specific context is captured in an empirically validated finding that is commonly referred to as Gresham’s law.

Gresham’s law states that even a potentially strong currency, with a valuation that is based upon a solid established correlation between unit of currency available, and product and service value available in the marketplace, can become diluted and weakened if too much of it is put into circulation. The more units of that currency that are out there in circulation, for every unit of productive and marketable value available in its national economy, the less those units of currency are or can be worth.

Imagine a nation with a strong currency that suddenly as a matter of policy, turns on the printing presses at its Treasury Department and floods the market with more and more of that money – and without any corresponding increase in the actual productive and market-facing value that its economy can maintain and that this money is supposed to represent in trade and transaction. If this approach is carried out too fully and for too long, that currency can plummet in value until it becomes essentially worthless. And that is why Gresham’s law is often summarized as “bad money drives out good,” and “bad money drives good money out of the marketplace.”

The basic principle underlying this is clear. Valuation and realizable value and their stability, depend on reaching and maintaining a critical balance: here between the levels of actual productive value that is created and maintained in an economy and in its markets, and a transactionally equivalent (monetary) value to that, that is supposed to represent it according to a set and agreed to value-for-value exchange rate.

Now let’s consider how this principle has its counterpart in other business processes and in the relationships that hold between other types of numerically scalable metrics. And let’s consider this in marketing outreach terms for purposes of this discussion. Let’s consider how this might apply in a phone center outreach setting and with a strong valuation baseline as a starting point that would be equated here with the once strong valuation of the above cited currency example, from before its printing presses were turned on and simply left on.

There is no such thing as perfect in the real world, but there are actively and carefully thought through examples of good and of intended best. As a baseline positive example that I am familiar with in detail, I turn here to one from my own work experience as a point of comparison here.

One of the industries that I have worked in as a consultant is automotive retail. And my largest scale assignment in that arena involved my taking an interim Chief Information Officer position with a large, roughly $400 million dollar automotive retail group with both new and used car sales outlets, and auto maintenance and repair shops, and direct business-to-business collaborations with for example, a partner financial service for setting up auto loans for their customers. Their goal was to offer a one stop shopping experience for their customers and both for purchasing a new or used car or truck and for maintaining these vehicles. And one of the core objectives that I went into that job with, was to remediate and expand a new but dysfunctionally disconnected call center that had been set up for the business as a whole.

There were a number of phone system and networked computer system hardware problems that I had to help unravel in turning that facility around, as well as significant software disconnects and related problems. Those issues are all worthy of consideration and discussion in a blog of this type, and I have in fact at least briefly touched upon at least a few of them in this blog. But my focus of attention here is different from that and in fact involves a basic functionality that I was trying to both maintain and strengthen while working there: their customer and potential customer calling system per se, that this new call center was supposed to facilitate and streamline.

Let’s consider the types of calls that the phone representatives working there were expected to make:

• They were supposed to call current customers with cars and trucks under warrantee to remind them when their vehicles were coming due for free services that were included in the terms of their purchase agreements. This included checkups and oil changes and a variety of other manufacturer or dealer provided basic maintenance options. And as these services were already covered and paid for as benefits to these customers, these calls were essentially always welcome and appreciated.
• These call center representatives were also supposed to keep for-fee maintenance and repair customers informed on information that they would need for scheduling work done. So for example if a customer needed repair done on their car that called for a replacement part that had to be special ordered, a phone rep would call that customer to tell them when this part had arrived, and certainly if there was going to be a delay in that so they could schedule their repair work. When special order parts where back-ordered and there might be delays in their delivery, this offered real value to the customer and was also generally appreciated.
• But these phone representatives also made sales calls, and to both established customers as their current vehicles began reaching a certain age, and to new and prospective customers as well.
• Let’s focus here on those new and prospective customers who had never purchased anything from any of the storefronts owned and run by this dealership group. Like essentially every other auto dealership, this business purchased lists of potential customers who were supposed to have been carefully selected and prequalified for inclusion on the basis of their meeting specific demographic and other qualifications. They would for example all live in an area that this dealership had found to match that of its current active customer base. Dealerships would specify where their customer catchment areas were when entering into agreements with these list aggregator businesses that they would purchase these potential new customer lists from, so they would only pay for leads from their area.
• And prospective customers included on these lists would have to fit a realistic profile for income and related criteria that would make them financially capable of buying a new or used car. And they would selectively include people with active driver’s licenses.
• And critically importantly, these lists needed to be up to date as the people most sought after were ones who might be interested in buying a car or truck, but who had not already done so somewhere else. Old listings tended to include people who had done that and who were no longer in the market to buy again.
• This is just a partial list of the types of filtering criteria that these leads aggregators use in assembling the lists that they sell to dealerships. To add one more, dealerships of necessity insist on buying exclusivity in their leads contacts lists; they do not want to buy leads that that aggregator is simultaneously selling to other, competing businesses, or that other aggregators are also selling to their business clients.
• So there were a variety of criteria that would go into assembling these lists, to increase the likelihood that anyone called on one of them would both drive, and would be interested in purchasing a good, reliable car or small truck of the type that this dealership group offered, and that they would want to do so in the right area geographically to make that one of their showrooms a good choice for them.
• In practice, one of my work responsibilities while there was to manage these leads list provider contracts. And I worked with one of my best sales managers there in doing so. The basic questions that came up in this due diligence exercise were very simple:
• How many of the prospective customer leads that were provided by each of the aggregators that they were in contract with, actually turned into completed sales? And what did this business actually pay for these leads when the overall cost of the complete lists paid for was amortized across those much fewer successful sales? And how did this cost compare with the potential profit margin that this dealership group could expect from these completing those sales, net of having to purchase these sales leads in the first place?
• It turned out that many of their leads providers were failing them for the low levels of conversions to completed sales achieved from their lists and a couple of them consistently, month after month failed to yield even one completed sale at all. I had to find ways to get this dealership company out from under the contracts that they had signed with a large percentage of the lead providers that they were buying these lists from because quite literally, so few of the entries on them were leading to sales that the dealership group was losing money on them when leads costs were properly taken into account.
• I worked with some very good people there and both for the managers who I worked with and for their hands-on call center and sales personnel, and together we were able to turn that part of this business around. I add that I got to work with a good attorney on this too, as well as with members of their Information Technology staff and a wide range of others. And I hold that up as my positive example where all effort was being made to only call the people who would be receptive to being called and who would see value in doing business with this dealership.
• Even under the best circumstances, only a relatively small percentage of calls of this type, and certainly cold calls to new potential customers actually work out and lead to completed sales. But all effort was made to at the very least make sure that no perspective customers who were called would have reason to hang up feeling irritated. That, among other things meant not taking a high pressure sales approach and always being polite. It meant listening as well as speaking and it meant knowing when to end a call that was not working too, and doing so with a thank you.

There is no such thing as perfect in the real world but there is and can be good and there is and can be polite, and real effort can be made to limit call lists to target audiences that actually make sense to the merchant calling. And that is my positive end of the scale example for this posting and its discussion. And it brings me to robocalls and badly framed ones that would leave anyone receiving them wondering what type of scam was being attempted on them – or convinced that they already knew.

Think of the seemingly endless flood of those calls as a counterpart to turning on those Treasury Department printing presses and leaving them on, and seemingly endlessly. And this vast toxic background and context that any good practices calling and cold calling in particular would be embedded in, renders them valueless too and to all concerned – and certainly to any business attempting to make them.

And to complete this example’s narrative, I cite businesses such as Nomorobo that provide automatic blocking services to prevent scam, spam, phone phishing and other offensive calls from getting through – and for both robocalls and in-person calls as would come from a call center of the type just described.

Robocallers see their costs per call as being so low that they can make money even if only the tiniest percentage of their calls actually get through and succeed for them. They are not looking for repeat business, and certainly for more dubious businesses that pursue business this way, they are only looking for one time scores from anyone they can convince to buy into their pitch. They, in game theory terms, pursue a win-lose strategy with their prospective “customers” and they only need to win occasionally to win big, overall. So the types of Gresham’s law style calculations that I would cite here do not matter to them. Businesses such as the automotive dealership group that I cited above seek to develop and long-term customers and seek to pursue win-win strategies and those calculations can mean the difference between success and failure for them. And the dynamics of this disparity drive the shift in valuation of customer calls, and of cold calls in particular down towards zero – and even into a “loss at best” territory and for all, and certainly for legitimate businesses.

• Bad money drives good money out of the marketplace.
• Bad calling drives good out of the market too, in this case converting it and certainly in its cold call forms into essentially guaranteed money losing propositions.

You can find this and related material at Social Networking and Business 2, and also see that directory’s Page 1. And I also include this as a supplemental posting to Section VI (Some Thoughts Concerning a General Theory of Business) of my Reexamining the Fundamentals directory.

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