Platt Perspective on Business and Technology

Rethinking exit and entrance strategies 19: keeping an effective innovative focus while approaching and going through significant business transitions 9

Posted in strategy and planning by Timothy Platt on June 21, 2017

This is my 19th installment to a series that offers a general discussion of business transitions, where an organization exits one developmental stage or period of relative strategic and operational stability, to enter a fundamentally different next one (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 559 and loosely following for Parts 1-18.)

I offered a to-address list in Part 17 and Part 18 that I repeat here for continuity of discussion:

1. It can be vitally important to make explicit strategic effort to more deeply understand where your business is now and where that business is headed if it seeks to simply follow a straight-forward more predictively linear path, rather than making a more profound shift and going through a genuine transition.
2. And it is equally important to be aware of the possibilities, at the very least of what types of transitions could be possible, and their implications and consequences.
3. This leads me to the question of what would be planned for in a strategically considered, intentionally entered into business transition, and how such a transition plays out.

And I offered at least an initial discussion of the first two of these points in those postings, noting that I would delve into the third of them here. I will do that in what follows, and in terms of the responses that I have already offered when addressing Points 1 and 2. And I begin that with the absolute fundamentals:

• True transitions, as I use that term, involve changes away from the current here-and-now of a business, and in ways that do not simply involve linear, readily predictable change along the lines of the pattern: the template of a business’s current operational systems, already in place.
• True transitions are by definition disruptive and novel and new, for what they bring and for their impact. And that can mean introducing fundamentally new processes and/or resources, and new goals and priorities that they would help meet.
• And this can mean closing down and shifting away from what has been a business’ standard and usual too. And this means both increased cost and increased risk and both for what is dropped and for what is added in. I have at least touched on this point already in this blog. But I expand on what I have said about this set of issues here, for purposes of fleshing out this line of discussion.
• Direct costs are increased as new systems have to be developed, and with that frequently involving bringing in new staff with areas of specialization and expertise that are new to the business, and that that business might not already be fully prepared to effectively performance-review, among other details.
• If new employees are brought in to manage tasks and take responsible for completing them, that are new and unfamiliar in detail to the managers who would supervise them, those managers are unlikely to be fully aware of what would and would not be realistic timelines for completing them. They would not start out knowing or fully understanding where legitimate impediments or challenges might arise and even when a hands-on expert in some technical skills area is working efficiently and effectively. And they might not know what would qualify as best performance benchmarks either. This is definitely a situation where managers and supervisors are going to have to go through learning curves – not in how to do this work themselves, but so that they know enough about it and its requirements so as to be able to effectively manage the people who do it and support them in their effort to do so.
• This, as presented here, directly addresses lover level and middle managers who are already in place in the business and who would have to help manage what this business is transitioning into, at its points of change. But goals, prioritization and scheduling issues of the type that I raise here, can have ripple effects too, and certainly when task completion dependencies arise that have to be accommodated, and where shared resources can become business performance bottlenecks. These ripple effects can spread out through large areas of a business and its overall functional systems, and particularly where key processes that widely connect to multiple areas in a business might be slowed or stopped by performance dependencies that mean employees not having the starting point resources that they would need for them to proceed.
• That addresses a few of the direct cost issues that arise here. Now I turn to at least briefly consider some indirect cost issues too, and I begin with one that could arguably be said to be both direct cost and indirect cost in nature: the need and expense of prototype testing.
• I could include this in the top half of this list of discussion points and as reflecting direct expenses that would go into carrying out a more fundamental change, and a true transition. But prototype testing is in many respects a risk management and risk-related due diligence exercise too, in which a new, next step process or approach, or a more comprehensive new system is locally tested and refined for more effective use and deployment in a business – if it proves itself as being worthy of that.
• Prototyping can be very disruptive for the offices, manufacturing facilities or other business areas that are tasked with actually testing these proposed changes. Time and effort in doing that, means not being able to carry out proven approaches in meeting standard ongoing goals and on time and according to priorities set from above.
• So the people and the teams that are assigned prototype testing responsibilities need to be supported in doing this, with allowances made as they go through learning curves in performing this New, and as they get up to speed with it.
• And allowance has to be made in addressing resource allocation requests, that this prototyping might require – and even at least somewhat unexpectedly, as experience with the systems being prototyped prompt refinement in them, and perhaps some recovery and correction too. And new and novel approaches that sound great on paper and in development and design, sometimes prove less than practical, and prove to be more expensive than desired when put in practice. Ideally, that type of challenge emerges during prototyping if it is to arise at all, and that in fact is one of the core risk management reasons why businesses prototype. But sometimes real problems only overtly make their presence known when scaling up from small scale and organizationally localized prototype testing too.
• The ripple effect issues that I made note of above, can and do enter into all of this.
• And this brings me to a second, and less easily preemptively planned for risk management, indirect cost issue that I would raise here: calculating into a transition’s budget the possible costs of failure of at least some aspects of a change program that is put into place, and with or without prototyping but with need for Plan B development and execution in any case.
• Real transitions do not always go smoothly or according to what might be more idealistically preconceived budgets. And even when they do succeed and certainly overall and as refinements and corrections are identified as to need and carried out, initial budgets can prove to have been unrealistic.
• These points reflect real costs that can collectively add up significantly, but they do not simply fit into the step-by-step budgeting of a change creating development so I offer them as indirect costs here.

I have discussed change and transition from a How perspective in the above narrative. The Why side of this, that orients and informs this How, is that change would be made with a goal of more fully and effectively fulfilling the business mission and vision and its overall strategic goals and their realization. That underlies all that I have said here up to this point.

I am going to step back from the details of Points 1 through 3 of the list of to-address points listed at the top of this posting, to reconsider the context that this transition is carried out in. And to be more specific there, I will address the issues of urgency, and its impact on both what is done and how. And I will also address all-at-once and step-wise transitions.

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

Rethinking vertical integration for the 21st century context 16

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. And see also Ubiquitous Computing and Communications – everywhere all the time and its Page 2 continuation.

Planning for and building the right business model 101 – 29: goals and benchmarks and effective development and communication of them 9

Posted in startups, strategy and planning by Timothy Platt on June 5, 2017

This is my 29th posting to a series that addresses the issues of planning for and developing the right business model, and both for initial small business needs and for scalability and capacity to evolve from there (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 499 and loosely following for Parts 1-28.) I also include this series in my Startups and Early Stage Businesses directory and its Page 2 continuation.

I began Part 28 with a briefly stated, essentially checklist formatted outline of how a strategically considered and planned startup would be launched, and in a manner that could lead to stable growth and development from there:

1. Start with as clear as possible a statement of what the new business’ founder and their founding team seek to develop as a business. Couch this in general goals-oriented, mission and vision terms for what this venture would offer to its markets, and for what would competitively set it apart there.
2. Then reality check that characterization of intended overall goals, against an equally clearly stated inventory listing of the resources and assets that that founder and their team can bring to this effort, and starting with what these people personally bring to the table as far as skills and experience are concerned that would support and enable this venture, as well as any financial or other resources that they can commit and devote to it. And to complete this list, include any negatives as well (e.g. anything like non-compete agreements with previous employers, as that would impact upon one or more members of this group actually being able to perform in this new venture as intended and desired.)
3. And now bring this all into more specifically actionable terms with at least the initial planning, outline details of their business plan thinking, that would help them leverage their Point 2 resources in developing a venture towards achieving their Point 1 goals. The goal in this step is to build a foundation for iteratively, step by step fleshing out the business plan that is to be followed here, with a consistent, orderly, mission and vision statement-oriented focus,
4. And to identify where possible, any places where Plan B refinement or initial-idea replacement updates might more predictively be called for, to make this new venture as secure in its succeeding as possible; plan for flexibility and resiliency here. That means being ready to step back and make changes and corrections as needed, and with a goal of making the business plan followed, a dynamic adaptable game plan for moving forward.
5. And this (ongoing) effort enters into completing a full business plan that all involved stakeholders can comfortably sign off upon. And it also enters into early development stage planning and strategic reviews as both the expected and as the unexpected arise and have to be dealt with and resolved too.

Then after concluding, at least for now, a discussion of in-house considerations as to how this would play out, I turned to consider outside forces and factors that can significantly shape a new business and both for what it seeks to do and become, and for how it would build towards that goal. I focused there on the roles that venture capital and angel investors can play in this as they take on what can become significant equity shares in a new venture. And as part of that, I at least briefly addressed a potential source of conflict that can arise between in-house business executives and owners, and outside investors and particularly as their timing and priorities expectations and requirements might differ.

I stated at the end of Part 20 that I would a discuss wider range of in-house and insider, and outside forces and factors that can help shape how the goals of the above numbered list of business development steps would be understood and carried out. In anticipation of that, I added that I would more explicitly discuss crowd sourcing as an outside investor option and from both the crowd sourced investor side and from the side of the business invested in, as a first such example. And to repeat an orienting note that I appended to this, I observed that:

• The factors that hold importance here are those that directly and specifically influence and shape that business’s capacity to create value. That is where these factors impact upon and influence and even shape the business at its most fundamental level, and outward from there.

Angel investors, and venture capital investors in particular: more traditional sources of outside investment besides supportive funding from immediate family and friends, involves significant levels of funding that comes from a small number of sources and certainly for any given venture that is invested in.

• A new business venture that has an arguably exciting mission and vision to offer might capture the interest and funding of a small group of angel investors but even there, that number is going to be limited and very much so, in all but the most exceptional cases.
• A venture capitalist, or more likely a venture capital company that is considering investing in a later stage startup or early growth business is in most cases going to want to be their exclusive source of outside investment funds. Their due diligence analyses would argue against their putting themselves in a position where they might face conflicting claims from other investors, to ownership rights to a share of the overall value of the businesses that they invest in, that would match and cover the investments that they have made there. So here, a limited number of these investors generally means just one and even with second round venture capital investment explicitly considered where the business that is being invested in has already proven itself.

Crowd sourcing reverses all of this. Investment funding from this type of source means small and even minuscule loans of invested funds from what can be hundreds, thousands, tens of thousands or more individual investors.

• Individually, none of them do or can claim hold to any significant share of the equity that a new business they invest in might hold.
• None of them individually would have much if any say in how the business is run and either operationally or strategically.
• Like angel investors, crowd source investors tend to be drawn to what they see as positive and affirming missions and visions as offered by the business investment opportunities that they pursue.
• And at least collectively, like venture capital investors, a community of involved crowd sourced investors can bring together very large pools of investment funds. Individually they might only modestly invest but when thousands and more of them all invest small, the overall result can become very large.

This process has all become a lot more streamlined in recent years, with the advent of crowdfunding platforms such as Kickstarter, RocketHub, GoFundMe and I add quite a few dozen more – and with that just considering funding platforms that have shown significant levels of actual activity and with real investment ventures and real investors. These platforms provide a number of services and both to the crowdfunding community and to ventures that seek such support. One of them, that holds value from the fund provider perspective can be found in how they vet and validate legitimate new ventures that meet their standards as legitimate places to invest money. And one that holds value from the perspective of businesses and organizations that would seek out this funding, is marketing and increased visibility, and through channels that crowd sourced investors would look to when selecting ventures to invest in. These organizations serve as middlemen in the crowd sourced funding arena, but ultimately the people who invest in the businesses they highlight, invest with those new ventures and as small investment level individuals. So the basic points just noted about crowdfunding still apply.

From a new business perspective, crowd funding provides a great deal more than just readily available liquidity, as important as that can be. It creates a marketing presence and market buzz, with all of the additional viral marketing reach that connecting positively with an online and social media-connected crowd can bring. And it does this with minimal loss of control over business decisions as they are prioritized and made.

• Decision making pressures from the funding crowd that has been reached out to, is primarily a matter of meeting a due diligence requirement of actually striving to reach the mission and vision statement goals that their crowd funding campaigns were built around, where an apparent good faith effort would meet the requirements and expectations of most of these investors.
• If a desired goal that was being funded towards were easy, it is unlikely that many would see crowd sourced funding in support of it as being necessary; it is the difficult-appearing challenges that get this type of funding, where real overall success can never simply be taken for granted.

I am going to continue and conclude my discussion of crowd sourced funding in the next installment to this series, at least for the issues that would be addressed here. And then I will turn to consider a more in-house set of issues and factors that can rise to real importance here: exit strategies and what the owners of a new venture seek to build it into, and from when it really begins to bring in consistent profits and moving forward from then. And as a part of that, I will explicitly discuss the issues of growth companies and businesses that really pursue that vision, and profit center companies and businesses that really pursue that vision.

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory. And you can find this and related material at my Startups and Early Stage Businesses directory too and at its Page 2 continuation.

Building a business for resilience 21 – open systems, closed systems and selectively porous ones 13

Posted in strategy and planning by Timothy Platt on June 3, 2017

This is my 21st installment to a series on building flexibility and resiliency into a business in its routine day-to-day decisions and follow-through, so it can more adaptively anticipate and respond to an ongoing low-level but with time, significant flow of change and its cumulative consequences, that every business faces in its normal course of operation (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 542 and loosely following for Parts 1-20.)

I began working my way through a set of to-address points in Part 20 that I repeat here for continuity of discussion purposes:

1. Thinking through a business’ own proprietary information and all else that it has to keep secure that it holds.
2. While reducing avoidable friction where there can be trade-offs between work performance efficiency, and due diligence and risk remediation requirements from how information access is managed. This, in anticipation of discussion to come, means consideration of both short-term and long-term value created and received, as well as short-term and long-term costs.
3. And this means thinking through the issues of who gathers and organizes what of this information flow, who accesses it and who uses it – and in ways that might explicitly go beyond their specific work tasks at hand.
4. What processes are this information legitimately used in, and who does that work? With the immediately preceding point in mind, what other, larger picture considerations have to be taken into account here too?
5. And who legitimately sees and uses the results of this information as it is processed and used and with what safeguards for the sensitive raw data and the sensitive processed knowledge that are involved, where different groups of people might have legitimate need to see different sets of this overall information pool?
6. Think in terms of business process cycles here, and of who does and does not enter into them.

I primarily focused on Point 1 of this list in Part 20, just briefly touching on Point 2 there too. And my primary goal for this series installment is to more fully examine and consider that second point and its issues and complexities. In anticipation of this, I noted at the end of Part 20 that not all friction in a business is created equally – and even barring consideration of need to sequester confidential or proprietary information per se, on a realistic need to know basis. Business systems friction can have its trade-offs, where locally increased friction can reasonably be considered acceptable and even as a preferred cost – as a means of reducing overall, system-wide friction and risk that might become more open ended in nature. But that positive side to this only arises when what might be considered selectively intended friction is thought through and planned out, for how it is permitted and even encouraged. I added at the end of Part 20, and with that point of observation in mind, that I would address Point 2 from the above repeated to-address list, at least in part in differential cost/benefits terms of the type that friction: planned for and unplanned for, raise.

I am in fact going to address that complex of issues in what follows, by way of a case study example as drawn from the printing industry. Alphatext Design, here renamed for purposes of inclusion in this posting, is a business-to-business provider of custom designed and printed customer branded marketing and sales materials, including hand-outs and larger display items among other offerings (e.g. fliers that would be handed to individual customers or mailed to them, and sales banners that would be displayed on sales floor walls and as signs and more.) For purposes of this discussion, this business can be viewed as having started out on a planned out growth and expansion campaign when it had five sales accounts managers – hands-on personnel who each manage a separate and distinct portfolio of client businesses from the sales perspective, and who hold their titles because it was decided that their clients would appreciate their business being handled by managers, and at a “higher level” at Alphatext than could be provided by sales clerks. This fit into Alphatext’s marketed image of offering premium service to all of its premium clients – and with all of its clients considered to be premium in importance and value there.

Let’s start with those sales accounts managers and how they fit into Alphatext’s systems. These in-practice hands-on staff members report to a supervisory sales manager – usually more simply referred to as their sales supervisor, who in turn reports to a sales director who holds wider overall responsibilities for that entire functional area of the business as a whole. And then Alphatext Design began to really take off in sales in its overall volume of business achieved and both for its already established client businesses and for the overall number of clients that it works with. Their products offered have real customer appeal for the customers that their client businesses serve, and this has prompted their client businesses to use more types of printed products that Alphatext can provide. And that success, and viral marketing that it has led to have in turn prompted more client businesses to buy their printed marketing materials from Alphatext Design too.

From a Point 1 perspective, and with the discussion of Part 20 of this series in mind, I note that this means a significant scaling up of the numbers of these hands-on sales accounts managers and a fracturing in who knows and holds what specific client business information and of all types as overall workload responsibilities become divided and in multiple directions. One consequence of this sudden and even somewhat dramatic growth, that exactly parallels the situation noted in my Part 20 example, is that the individual areas of responsibility of these sales-oriented accounts managers become narrower and more focused so they see less of the overall picture of what they do as a team in their own day-to-day work experience. And coordinately with that, they find themselves less and less connected as a group with their same-work area colleagues, and particularly as they no longer all work out of the same office location together.

I was in fact writing about this same business without naming it in Part 20, when I wrote of the counterparts to these sales accounts managers in Accounting, and how scaling up the business as a whole impacted upon them (e.g. Alphatext Design’s hands-on accounts receivable managers and their supervising managers who manage those same accounts from the payment received, accounting side.) Before this business expansion, the smaller numbers of both groups of client-facing employees could and did know and talk with each other and daily, and both within and between these two functional area teams. They all worked in the same building and they all shared the same break room where they would gather for lunch, or to chat over coffee or tea. Now the business they work for begins to really scale up and for headcount as much as for anything else, and complexities enter into this picture, and communication becomes more strained and even disconnected.

Everyone working with client data and in any way, is required to safeguard any sensitive information that they see, and that is presented to everyone there as a workplace requirement that cannot be violated. But this new business expansion, has created a splintering of what had been effective, and I add meaningfully important if informal communications and information sharing channels, impacting on what would be allowed and even encouraged information sharing as well. And ultimately this negatively impacts on what information and particularly processed knowledge is held by this business as a whole too, as opportunities are lost to connect the dots between what different people know, who are working on the same and similar clients and on their same and similar issues. As an example of this, when everyone in these two still-closely connected groups could and did freely communicate, they could compare notes on specific clients that might be experiencing one-off problems or issues, as for example with product delivery. And as a result of this they would be in a good position to spot any emerging trends there, that others in the business might need to know about and as quickly as possible. When impending sales event signs ordered don’t arrive on time, the first people to hear of that will be in sales and billing. So any drop-off in communications there, would have real impact on the business as a whole.

At least some avoidable complexities entered into this overall system from simply linearly scaling up this part of the business up, where for example expansion of client numbers and personnel for managing their accounts might no longer mean one accounts receivable specialist managing a same portfolio of accounts as a single sales manager does – and with this shift creating more complications for all involved, where effective communications would be needed. Quite simply, the supervising managers involved in this two functional area, business sub-system, make their own accounts assignment decisions separately for their own teams. And they do so without coordinating between their respective functional areas with their same-level managerial counterparts on matters of who on their own teams are going to be responsible for what accounts.

• Viewed from the higher level perspective offered here, that decision making consequence looks like an invitation for emerging problems to step in and for all involved. Why? Complexity.

When Alphatext Design was first founded, they had one sales accounts manager and one accounts receivable manager so they of necessity worked on the same accounts for the same list of clients. When the company began to expand out this congruence was maintained at least at first. Then when the business began to more rapidly grow past the five sales account manager level that this narrative started at, this congruence began to break down, as it was not taken into account as an explicitly considered functionally significant element of the business growth model in place.

When employees who have individually been able to work with one counterpart staff member in a functionally connected service on issues related to all of the clients that they work with, suddenly have to find and reach out to what might potentially be a different one for each and every client that they work with, and to fellow employees who they do not know or even ever see at work as they work out of different physical offices, that creates inefficiencies and friction for everyone involved. But viewed from the perspective of these two supervising managers, who “own” and run their own services, it is to be expected that they would each individually and separately want to make their own task assignment decisions in managing their own staff – and even if the consequence that I write of here is a possible outcome of that. And this brings me directly and specifically to the issues and challenges of Point 2 of the above list.

Scalability and its execution in realized business growth was entered into as a strategic decision when Alphatext Design began to significantly increase its headcount to match its increase in revenue generating business carried out. Simpler linear scaling was at least attempted as an easiest and at least seemingly most cost-effective and risk-reducing due diligence solution. The systems and organizational patterns in place have always worked in their historical past, and in fact successfully enough so as to make this business expansion both possible and desirable. But the hard reality is that linear scaling on its own can only go so far, successfully and in any real-world system. Ultimately at least some nonlinear, and disruptively new operational and I add strategic systems and structures will usually have to be developed and included in any really significant business growth too.

• Some of this stems from not considering what in retrospect have always been significant factors or conditions and from what has simply been taken for granted – such as the congruence of how a smaller Alphatext Design had their client accounts divided up with groups of them consistently serviced by some single individual sales manager, and with those same accounts handled by one accounts receivable manager who they knew and well, and who they directly communicated with.
• Some of the disruption that can emerge from linearly scaling up a business past a point where that can effectively work, stems from the emergence of new factors or conditions that were not relevant before and certainly not in any systematic matter, but that have become so with a real increase in business scale.

Consider the challenge of making sure that a same set of clients is managed on the sales and accounting sides by single sales and accounting managers in order to streamline communications between these functional areas of the business. Sales and Accounting fit into different lines on the table of organization that do not connect in most cases until near the top of the chart and in the senior executive team – or even with the Chief Executive Officer. But the people – or person working at that higher level of a business are not generally going to be directly hands-on involved with managing lower level decisions such as task allocation for hands-on non-managerial employees. So no real coordination here is likely to take place, at least without a more disruptive change.

That type of situation as I have been discussing it here, and I add a variety of others that I have seen play out in businesses like this one, are why larger businesses at least, often bring in Chief Strategy Officers – executives tasked with helping to shape strategy in its nuts and bolts implementation level details, but who also hold responsibility for making sure that processes and practices in place throughout the business actually connect into and support the overall strategy and business plan in place too, and the goals and priorities that they are supposed to lead the business towards fulfilling.

• In practice, this can become a new executive level position in a business,
• Or these functional responsibilities can be added to the list of responsibilities of an already established executive position, such as that of the Chief Operating Officer, where they would now be expected to look and reach lower down on the table of organization than they had been doing in their until-now more routine work.
• But adding new responsibilities into their task portfolios would probably require shifting at least some of what they have been responsible for into the hands of others so they can still have a manageable workload,
• Or require a staff expansion for them with new types of managers hired who would report to them,
• Or both.

Setting aside these and similar more table of organization level considerations as to how a business might change as it scales up, let’s more directly consider the issues of communications and information sharing here, and as changes in the patterns of what is done and by whom and in what is allowed and by whom, might increase or ameliorate friction in these systems. I am going to turn to that aspect of this discussion in a next series installment. And then after delving into that set of issues, I will turn to consider Point 3 of the to-address list offered at the top of this posting.

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.

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.

Balancing innovative change and ongoing reliable stability and consistency 5: strategic thinking, planning and execution 2

Posted in strategy and planning by Timothy Platt on May 24, 2017

This is my 5th installment to a series in which I explore tactical and strategic approaches to business management and leadership, and best practices approaches for coordinately pursuing both as context dictates. See Business Strategy and Operations – 4, postings 655 and loosely following for Parts 1-4.)

I offered a still to consider, list of to-address points for this series at the end of Part 4 that I repeat here as a starting point for this step in this series’ overall discussion:

1. I will move on in this narrative to discuss the questions of identifying disconnects in this (nota bene: between strategy and tactics), and as early as possible when they do arise.
2. And I will consider and discuss startups, as a business context where founding executives can find themselves facing learning curve challenges in understanding and addressing the issues that I raise here,
3. And the sometimes significant challenges that large and complex business organizations can create in aligning strategy and tactics, with effective disconnect identification and remediation implemented as a core ongoing due diligence process.
4. And I will return again to my starting case study example for this series, to consider lessons learnable and remediative approaches that might be possible for that business – and at least some of the trade-offs that would have to be resolved in that too.
5. And that … is where some very specific, crucial negotiations-related issues enter into this series’ narrative.

And I begin here in this posting with the first of those five points, and by highlighting the obvious: change happens and the unexpected and even disruptively unexpected happens too, and disconnects do arise between what is expected and planned for, and what is actually faced. Disconnects happen, and between longer-term overarching strategic planning and actually encountered reality faced, and between more here-and-now tactical planning and its expectations and the reality that is suddenly encountered and that has to be operationally addressed. And certainly when tested by the disruptively unexpected, disconnects can arise between strategy and tactics in place.

So my goal for this posting is not to offer or even suggest the existence of some magical management process that would eliminate uncertainty or the appearance of the unexpected, or the occurrence of disconnects between what was planned for and prioritized, and what has to actually be done next and how. My goal here is to address the issues of limiting the occurrence of these disruptions to the truly unavoidable, and it is to offer at least an orienting overall approach for responding to these events when they do arise, and more efficiently and smoothly so their impact can be kept as limited as possible,

• And both for their reach throughout your business systems and in how they would affect your customers and other external stakeholders, and
• Over time, where these events would be resolved as quickly as possible,
• And with lessons learned and operationalized so your next such disruptive event is not simply going to be a repeat of one already faced.

How do you best “identify disconnects in this, and as early as possible when they do arise”? This begins with really tracking where you are now and how you got there so you can, among other things have a capability for identifying drift or overt shift from what you would expect and have planned and prepared for, to an unexpected new.

Ultimately, this is an information development and management problem and a communications problem. Even perfect information and communications systems, with all necessary information developed and organized and shared as needed, and real-time cannot prevent the completely novel and unexpected. But good information management and communications practices can help you, and your at least potentially affected stakeholders, from being blindsided and certainly from more gradual drift from the expected – and before a crisis tipping point has been reached from that.

Let’s consider this from a strategy and tactics perspective and more specifically in terms of how the two do and do not effectively connect together in day-to-day and longer term business planning and execution. And I begin by offering a simplifying division of labor understanding of what strategy and tactics are, in practical day-to-day terms:

• Strategy tells you and the members of your overall business team what to do and with what priorities and for achieving what goals,
• And Tactics map out how to accomplish that and with both task selection and completion, and results and performance benchmarking and reviews included for better carrying out next steps, and subsequent occurrences of those same tasks.

So ultimately, this posting is about understanding and bridging any potential gaps between knowing what to do and knowing how to do it, and in the face of a lack of perfect information availability and in the face of sometimes genuinely unpredictable change and disruption.

I noted earlier in this posting, the importance of learning from challenges faced so the next disruptive disconnect between strategy in place and its tactical implementation is not going to be a repeat of one already faced – but not apparently, effectively learned from. Recurring instances of some same disconnect, and of a disconnect that rises in level of significance so as to merit specific focused action, reflects a structural failing in either the underlying strategy itself where it does not meet actual needs or circumstances faced, in the tactically defined and shaped processes in place that should implement strategy, or both.

• One-off disconnects that are corrected for by type and that would not recur as a result, are learning curve opportunities and opportunities to keep the business more agile and effective in the face of ongoing change.
• Recurring disconnects and certainly recurring ones of some same basic type, call for a more specifically corrective remediation response and in the business systems in place. They constitute red flag warnings of what might be wider and more pervasive underlying problems in the strategic plans and in the operationalized tactical planning in place, and can in fact primarily represent points where wider underlying business systems challenges are prone to visibly erupt.

I am going to continue this discussion in a next series installment, where I will focus on one key word in the above cited Point 1: “early.” Then I will then proceed from there to at least start a discussion of Point 2 of the to-address list offered at the top of this posting:

• Startups, as a business context where founding executives can find themselves facing learning curve challenges in understanding and addressing the issues that I raise here.

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.

Don’t invest in ideas, invest in people with ideas 30 – bringing innovators into a business and keeping them there 13

Posted in HR and personnel, strategy and planning by Timothy Platt on May 22, 2017

This is my 30th installment in a series on cultivating and supporting innovation and its potential in a business, by cultivating and supporting the creative and innovative potential and the innovative drive of your employees and managers, and throughout your organization (see HR and Personnel – 2, postings 215 and loosely following for Parts 1-29.)

I have been writing in recent installments to this series about finding and hiring the best, and particularly for critical needs positions in your business and when you need to find new employees who do not fit into any given, standard cookie cutter-type moulds. And with that in mind as a general overarching area of discussion, I successively addressed four specific issues and their possible resolution in Part 27, Part 28 and Part 29 that I repeat here for continuity of discussion as I proceed on from that starting point:

1. First, you need to reach out through communications channels that the people you seek to reach actively use,
2. Then you need to craft conversation starting messages that will prompt them to reach back to you, and to at the very least look further into what you have to say, and into what you do and are as a business.
3. Then you have to actually engage, and with a goal of starting a conversation – which would lead to these people thinking of your business as a possible next employer, and with their coming to see one or more positions that you have available as possible good next career steps for themselves.
4. And this crucially means you’re learning more about them, just as they reach out to learn more about you.

I have, as just noted, offered at least a foundational answer to the issues and questions raised in those four numbered points in the three immediately preceding installments to this series. And I continue on from there, with a goal of putting that flow of discussion into an organizational context, where I took a more individualized approach to special needs hiring there. And that brings me to two more areas of consideration that I made note of in Part 29 and that I repeat here, as new additions to the above list:

5. How can you more effectively bring current employees and managers on-board with change in hiring and in personnel policy and practice, as your and their business pivots towards being more innovative – and even in its basic business processes where that would create greater business flexibility and competitive strength?
6. And how can you best enable a smoother integration of the type of change that I address here, into a perhaps very settled existing system and in ways that can increase buy-in from stakeholders and gate keepers already in place – and at a structural organizational level in your business as well as at a more strictly interpersonal one?

Simply promulgating policy and passing it down the table of organization here, is not going to in any way guarantee either buy-in or compliance, or even a shared understanding as to what is supposed to be done now or why – which can explain a lack of actual day-to-day realized buy-in and compliance in and of itself.

I have made note in recent installments to this series, and certainly in Part 29, of how both compliance with and even shared understanding of new policy and practice of the type discussed here, can require active support from the corporate culture in place. And I have explicitly stated that making a change to the type of hiring and staff retention approach that I write of here, can require change and even relatively fundamental change in the overall corporate culture in place too. I stated there, that I would delve into this complex of issues in the course of this overall discussion, and will begin to explicitly do so here in this posting, as I at least start considering Point 5 as just listed above. And I begin that by posing a challenge, or rather by acknowledging one that the ongoing momentum of a business can and often does offer.

• Supervisory managers who are looking for new hires, and I add members of Human Resources who are supposed to assist them with this, and help keep processes followed aligned with business norms, all tend to follow processes and practices that they themselves have had to follow in their own careers, and from both sides of the hiring table.
• When these processes have come across as onerous or difficult, even the managers who found them the most objectionable when they were going through them, can come to see them as “paying one’s dues” and as a necessary part of the new employee candidate-filtering and selecting process – and not as problems that they might have prevailed over themselves but that nevertheless create avoidable problems for all concerned, and on both sides of that hiring table.

So as a starting point, Point 5, above is in many respects a matter of bringing decision makers in the hiring process to see this workplace and task performance requirement through fresh eyes. And for finding and bringing in the best possible new hires, and particularly the creative and special skills and experience best, that means looking through and thinking through the hiring process both from their own perspective and from that of the candidates who are under consideration – and particularly for those candidates who could bring the most to the business if hired, and who all of your competitors would want to hire too.

• This is important; re-envision the hiring process as a manager or as a Human Resources professional who works on hiring-process tasks, from the best candidate perspective, and from the perspective of you’re looking to hire those best candidates in a seller’s, candidate favoring market.
• When you are looking at these candidates, the market is always going to be at least somewhat of a seller’s market, and even if it is an essentially entirely buyer’s, hiring business-favoring jobs market for finding and bringing in more routine hires.

Now, how do you actually bring these business-side hiring process gatekeepers on board with all of this, as the business they work at seeks to pivot towards being more effective in finding, hiring and onboarding their next business step forward, new hire enablers?

I at least begin addressing that question by turning back to the above repeated Points 1-4 of the numbered list at the top of this posting. The interactive online experience as an all but ubiquitously expected presence, and online social media have changed the playing field here and for both job seekers and hiring businesses. And at the same time that this has affected how candidates and employers find each other, come to know about each other and interact, this also offers a key element to the answer to that question too.

Effectively bringing a change like this into a business means offering the people involved in it as stakeholders and gatekeepers, the tools that they would need to actually follow the new approaches and processes put in place. And that begins with information gathering and communications.

Marketing and Communications is always involved in the hiring process when a new hire would work in that department or service and in that functional area. But in an interactive online and social media shaped context, it is vitally important to bring relevant skills and experience from these professionals into the hiring process in general, and exactly as more generically skilled Human Resources professionals are brought in, to help organize and manage specialty skills hiring for other functional area services. An involved member of the HR team does not have to be an expert in the skills sets that they would help another department or service to hire for; they do not necessarily have to actually know anything about the details of what a new hire there would do. That is an area that the people involved in this from the hiring department or service would be expert in. Similarly, a social media and related communications expert from Marketing and Communications, need not be an expert in what a new hire in another department or service would do either. But they could offer real expertise in finding and vetting the right online channels to connect with the right potential new hires through. And they could offer assistance in crafting a conversation with these people, that could be built from as best candidates are identified and pursued.

• Even when a new hire would work in the most abstruse technical areas, an initial conversation starter that might lead to their applying for a job with your business, is not going to be technically detailed and abstruse. It is going to be more general and two-way introductory, and more generic in many respects for that. It is going to be more about “this is who we are; what are you looking for as a next best opportunity and how can we work together to reach our respective goals?”

I have started addressing Point 5 of the above, here-expanded to address list by expanding the range of expertise brought into the candidate selection process at the very least, and in building a more effective communications bridge that can be used in the next hiring process steps. I am going to continue addressing Point 5 in the next series installment and will at least begin addressing Point 6 there 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. Also see HR and Personnel and HR and Personnel – 2.

Leveraging social media in gorilla and viral marketing as great business equalizers: a reconsideration of business disintermediation and from multiple perspectives 1

Posted in social networking and business, strategy and planning by Timothy Platt on May 20, 2017

Two of the most powerful and at the same time tritely used terms in the “new” economy of the social media-driven interactive online business experience are “disintermediation” and “frictionless.” Both are often and even commonly misused and without explicit consideration as to what they mean operationally, or of even what they can mean. But at the same time, both of those terms at least point toward very real and fundamental truths and towards very real sources of opportunity. My goal for this posting is begin to at least briefly delve into this dichotomy of promise and expectation on the one side, and of actual realizable value on the other, from the perspective of business simplification in its many forms.

When I cite “social media in gorilla and viral marketing” in the title of this posting, I refer to market facing disintermediation processes that a business can enter into. I will directly consider that side to disintermediation as a whole in what follows, but I will do so in a larger business structure and function context as well, and with consideration of processes such as table of organization flattening as well. And I begin that discussion at a more generally inclusive, overall business organization level, addressing disintermediation as it might be pursued in a variety of contexts.

More specifically, I begin here with how disintermediation can and does create positive value, as for example for smaller businesses and ones just starting out, or for established businesses in need of fundamental change. There is in fact real meaning, or at least real potentially for it, when a term such as disintermediation is invoked, and certainly when specific applications of it such as viral marketing are considered. I begin here with the fundamentals:

• When disintermediation means cutting out extra, excess cost-center layers in an organization and its functioning,
• That hold potential for becoming, or that already have come to serve more as performance restricting barriers between functional areas within a business,
• Or between those businesses and their customers in their target markets,
• Or between them and their partner businesses in their supply chains,
• Or in any combination thereof,
• This streamlining and simplification can reduce or even eliminate a whole range of possible step-by-step operational mark-up costs that would otherwise have to be carried.
• This type of impediment and barrier removing disintermediation holds potential for speeding up internal business processes, sales and supply chain processes and essentially any and every other aspect of the organization that can become hindered by dysfunctional table of organization and functional requirements complexity. This can, if planned for and carried out effectively, make an organization more agile and better capable of meeting its immediate, real-time needs,
• And it reduces information sharing failures and the business systems friction that that creates.
• Bottom line, under the conditions as just outlined here, disintermediation can make a business stronger and more competitive in its industry and in its markets.
• And when this is taken as an automatic and axiomatically presumed outcome of any such organizational simplification, that is when reasonable and realistic and focused-upon in the above bullet points, can veer off into the realm of hype and comforting fiction.

The cumulative end result of all of the above bullet points, and certainly for all but the last of them, is that even a small but nimble, effectively connected enterprise can compete with a large and diverse corporation, at least in its area of business and market-facing strength, and on an essentially even footing with them for capturing market share and profitability. I write what follows with that in mind, and with the caveat of a last bullet point to the above list in mind too.

Here, to pick up on the specific disintermediation steps cited in the title to this posting: gorilla marketing and its marketplace-sourced viral marketing cousin, this means a business directly reaching out to and connecting with its marketplace and generally through development of two-way conversations where that business listens at least as much as it speaks, in order to make sure that when it does speak, it conveys the right message and in the right way and to the right audience and through the right channels. This means they’re not going through intermediate marketing or marketing data provider levels to learn about and respond to market interests and needs, to do so directly and creatively and in many respects at low or no direct cost.

• That briefly stated understanding of disintermediation, and of how it can at least reduce friction and create greater agility in this market facing context,
• Represents the truth behind what can become the hype, and certainly when business systems simplification is carried out within the framework of an ongoing strategic vision and understanding, and within an ongoing strategically considered operational plan.
• Here, ill-considered and ad hoc and a lack of analytical follow-through to track actual results, lead to simplification as hype by way of comparison.

And that set of points at least opens the door to the possibility of how disintermediation per se, and simplification for the sake of simplification can also come to mean creating seemingly-simpler but very real inefficiencies in a business too, and even new sources of inefficiency for it and certainly if the streamlining processes carried out that lead to specific disintermediation steps are not effectively thought through and executed.

Ultimately, what I am writing about here is not structural and organizational simplification per se, though that is a big part of this posting’s goal and purpose. This posting and others to follow it as a new series are also only partly about developing best practices for mapping out and carrying out the right simplification steps: the right disintermediations and in the right ways. I primarily address that set of issues elsewhere in this blog. See, for example, my series: Intentional Management for a more in-depth discussion of that (as can be found at Business Strategy and Operations – 3 and its Page 4 continuation, postings 472 and loosely following.)

My goal here is one of thinking through what organizational layers and systems actually are and both as a matter of structure per se as would be represented on a table of organization, and as a matter of business function and how that is parsed and distributed throughout the organization. It is about knowing what might best be maintained or even expanded upon, or simplified or done away with and where, and it is about knowing when layers and structures in place in a business and its systems provide value and reduce risk, and when they simply add costs and potential for increased risk.

I have been discussing this set of issues in fairly abstract terms up to here. But I will continue from this foundational starting point in a next series installment, by offering two admittedly cartoon-like business model caricatures. In anticipation of that next installment to come, I acknowledge up-front that while both are very realistic and describe actual businesses and business approaches actually pursued, both also fit into and support what might be considered the at least potentially hype-end of the spectrum for thinking about disintermediation too. And I add that both case study stereotypes consider wide ranges of specific forms that disintermediation can take (e.g. removing management layers and flattening table of organizations, but also reaching out directly and creatively to the market and its end-users for what a business offers and with a goal of “eliminating the middleman” in both arenas.)

The two scenarios that I will at least briefly explore are:

• A new, young, small startup that seeks to leverage its liquidity and other assets available as creatively and effectively as possible, and from its day one when it is just starting to develop the basic template that it would scale up from,
• And a larger, established business that has become at least somewhat complacent and somewhat sclerotic in the process, and with holdover systems and organizational process flows that might not reflect current actual needs or opportunities faced.

I am also going to continue on from this to identify and challenge some of the tacit and more usually unstated types of assumptions that usually arise in these types of examples and that I will start from too. And I will pursue that reanalysis as a means of more fully analyzing what the general process of disintermediation actually entails, and what its specific market-facing applications of social media-driven gorilla and viral marketing actually do and can mean, as well as what its more internal-to-the-business applications mean and entail.

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. You can find this and related postings at Social Networking and Business 2, and also see that directory’s Page 1.

Pure research, applied research and development, and business models 4

Posted in strategy and planning by Timothy Platt on May 16, 2017

This is my 4th installment to a series in which I discuss contexts and circumstances – and business models and their execution, where it would be cost-effective and prudent for a business to actively participate in applied and even pure research, as a means of creating its own next-step future (see Business Strategy and Operations – 4, postings 664 and loosely following for Parts 1-3.)

Every business that is planned out and every business plan that is implemented and carried through upon faces two fundamental financially driven processes that they have to effectively reconcile if they are to succeed: expenses and cash flow out, and revenue generation and cash flow in. A nonprofit business might seek to essentially break even in this with any potential profitability expended towards realization of their founding mission and vision, net any financial reserves set aside for the explicit due diligence purpose of maintaining ongoing organizational stability. And a not-for-profit might similarly seek to balance its books with a minimal-at-most “excess” profit generated, by for example passing on greater savings to its customers or clients to balance its books. But of importance to this discussion, even the most assiduously maintained nonprofit or not-for-profit business or organization faces this cash flow dynamic – and not just their for profit enterprise peers and businesses that seek to maximize realized profitability.

In a fundamental sense this entire series is about finding ways to achieve an effective balance there, when the additional costs and risks of pursuing next-step-forward research are added into the mix of what might be carried out by an organization. I have been discussing timeframe and risk management issues in installments leading up to here in this series. And I step back from that level of consideration here, to reconsider the above-noted accounting balance and its impact on what would and would not be maintained in-house, from what might be the most cogently fundamental level that this can be viewed from: consideration of what makes a unit or area of a business a cost center or a profit center per se.

• As a cartoonishly simplistic starting point, I note that bottom line, a cost center requires more funding in its maintenance and operations than it can or does generate as new revenue generated. More money goes into it than comes out of it.
• And a profit center correspondingly generates more new revenue than it expends in its maintenance and operations, making it a net revenue generator. So the distinction is simply one of overall cash flow balance.

As a first complicating factor that I would add to in that to make this discussion more realistic, I raise the possibility that a putative cost center as determined by this bare bones analysis, might enable that business’ primary profit center to be able to generate higher levels of revenue. In this case, a valid analysis of that “cost center” area of the business would require a more comprehensive consideration of both that functional areas itself, and analysis of its functionally connected and supporting context. Such a business unit might appear to be a cost center when only considered as if in a vacuum, but a realistic analysis of its true status there might require coordinate consideration of what it has direct and in this case facilitating, enabling impact upon in the business as a whole too. And that can turn a seeming cost center into an enabling profitability center and even an essential one. Conversely, a seeming profit center – when considered in vacuo, might be found to in fact qualify as more of a cost center when considered in its larger context, and certainly if maintaining and operating it as is, simply means that it will continue robbing resources from what could be much larger and more effective profit centers in that business. A marginally effective profit center can, under the wrong circumstances achieve and maintain that status by in effect robbing the business that it resides within from what could be greater sources of profitability potential elsewhere in it.

This second level analysis can cut both ways in forcing a reconsideration of what is and is not a cost or profit center for a business. And effective ongoing strategic business management has as one of its key goals, the identification of the types of inefficiencies that can turn a seeming profit center into a more actual cost center, or a seeming cost center into more of a profitability enabling one, and with a larger overall goal of optimizing within and across the business for greater overall financial effectiveness in general.

But returning from that higher level organizational point of consideration to focus on the individual functional unit or area in a business, let’s specifically consider an organized effort to create new and next for it, and with a goal of keeping that business effectively competitive long term: let’s consider research and product design and development here.

I focused in Part 3 on timelines, and the issues that arise in that context are critically important here. Realistically, a short timeframe, or even a single instant snapshot-in-time approach to evaluating cost and profit center positioning in a business might or might not make sense, depending on the business and its overall business model and its overall expected timeframe of operation.

• If the business under consideration is a long-term venture at least as a matter of intent,
• Then it becomes important and even necessary to take longer-term time frames into account
• When balancing overall incoming and outgoing cash flow considerations for areas of it that are under systematic analysis for this.

To put that into a specific context, consider business units that are at least initially presumed to be more borderline for their fiscal balance in this, and for whether it makes sense to maintain them as-is.

• Would it make sense to keep some particular seeming-borderline unit of a business and its function in-house, or would it be more cost-effective to outsource it to a specialist partner business and not have to pay out all of the maintenance costs for keeping it in-house?

The word “longer” as just used in the preceding paragraph, and what that actually means becomes important here, and certainly for businesses that see cyclical patterns of profitability with for example recurring peak revenue-generating and slow break-even or low level loss seasons. And this analysis would probably be undertaken at least twice: once considering that unit of the business as if in vacuo and entirely on its own, and a second time when taking into account its functionally connected contexts – and here over at least one complete peak and trough cycle for seasonally driven businesses.

But this only applies to long-term ventures and businesses that are at least intended to follow that pattern. And perhaps more importantly it specifically applies to businesses that would be expected to follow more predictable patterns for when they would face high profitability and when they would see business really slow down. Uncertainty there would skew any cost center versus profit center calculations too, making potential cost centers that much more risky for their downside potential and certainly in the face of (less predictable in detail or timing but still quite expectable) lean times.

Scale of operation and particularly larger scale of operation with capacity to build and maintain greater reserves can reduce risk from maintaining true cost centers in a business, by reducing the overall level of risk that they might generate for the business as a whole. But efforts to make the organization lean and agile and functionally efficient might still significantly drive initiatives to the identify and remove or at least limit cost centers per se, except when specific modulating factors would dictate that they need to be maintained and in-house anyway.

Addressing that from the perspective of a specific case in point example: research and development:

• Outside competitive challenge and rapidly changing marketplace demand can create that type of countervailing pressure to maintain in-house new product development, including at least some relatively basic supportive research that could feed into it, as a here-relevant case in point.

As already discussed in this series in its opening installments, short-term businesses, and short-term opportunity ones would be hard pressed to find reasons for ever really looking beyond the immediate here-and-now snapshot view of what is a cost or a profit center for it. And all effort would be made to develop and maintain profit centers and immediately weed out any sources of loss or potential loss, however brief for that. Such enterprises and their business models would never be expected to support research or development efforts and would in most cases seek to start out with essentially their full realizable range of products and services already planned out and ready to provide, market and sell.

Now let’s reconsider the above lines of discussion in a bit more detail, and in a research unit context. And I begin that with a key issue that I have just been citing: “uncertainty.” I briefly sketched out what pure and applied research and targeted product development are in Part 2 of this series. And one of the core distinctions that I made note of as distinguishing between them there, at least from a business perspective is that of uncertainty of pay-out, and both for their overall potential profitability and for their timeframes of that profitability being realized. A larger stable business that can more readily maintain supportive reserves for among other things bankrolling its future through research, and a business that can more reliably long-term predict and manage its revenue flows is going to be in a stronger position to take the risks of maintaining longer-term potential areas that might create profitability at some future date but only then: such as longer-term research. Smaller and less fiscally protected enterprises would be less secure in attempting this. And with that, I have just restated the basic conceptual model underlying the default vision of only large and established corporations being able to develop and sustain real research and certainly anything like pure research in-house.

I am going to examine the assumptions made there in justifying a big business only approach to research, and in this series up to here as a whole, in my next installment where I will at least briefly consider and sketch out a smaller, lean and agile research-focused business model alternative – and how this briefly sketched description of it need not automatically be seen as a contradiction in terms. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory.

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