The Importance of Information Flow for Business Development

The flow of information helps entities integrate operations and services that lead to a more efficient system. It doesn’t matter if we are discussing a single company, a group of companies, or an entire hub of economic activity. The process of encouraging proper information transfer and collaborative problem solving is important for moving an organism to its highest state of existence. 

Imagine for a moment how well your body works if your feet didn’t communicate with your brain and your brain had no way of talking to the hands. You would have a difficult time walking, grabbing items, and otherwise functioning. You would eventually starve and pass away. The same occurs in companies and economic hubs when elements can’t communicate together. 

Glazer in his book Smart vs. Dumb Service Strategies: A Framework for Ebusiness Intensity discusses the importance of information flow in developing an entity for higher levels of performance (2001). He makes three distinctions where information integration can be beneficial: 

Downward flow: The flow of information between companies and customers (i.e. the in and outflow of information). 

Upward Flow: The flow of information between suppliers and the company (i.e. efficient operations by integration of networked operations). 

Internal Flow: The flow of information held internally by a company (i.e. collaboration of internal elements). 

Within any entity there is a need to ensure information to and from stakeholders is being used to improve the overall system.  That information needs to flow includes customer to company, company to supplier, and department to department.  Without that ability the system becomes dysfunctional and non-competitive. Improving the flow of information can make a difference in an organism’s ability to effectively adjust to its environment and succeed. 

How that improvement in information flow occurs depends on the type of organism but generally relates to meetings, positive relationships, egalitarian structure, information postings, open cultures, surveys, collaboration, and promotion. The organization must fully and functionally accept the inherent nature that new information should be encouraged, accepted, and capitalized on. 

Glazer, R. (2001). Smart vs. Dumb Service Strategies: A framework for EBusiness Intensity. New York, Armonk E-Service.

A Systemic Approach to Improving Corporate Performance

William F. Roth  PhD

                                            

The concept that needs to be introduced at this point is “systemic thinking,” a concept very much in vogue twenty-five years ago that eventually fell out of favor, overshadowed, unfortunately, by more quantitative approaches. The systemic approach to management is built on two pillars. The first is the belief that “a whole is more than the sum of its parts.” This means, basically that the interactions between the parts of an organization are just as important as the parts themselves in terms of the organization meeting its objectives.

The second pillar of the systemic approach is the “Development Ethic.” It says that employees should be encouraged to develop and utilize their positive potential to the fullest possible extent in order to improve their quality of work life and of life in general and to improve the fortunes of the company. 

Organizations that have become “systemic” in nature possess four key characteristics. First, they are truly participative in the sense that every employee affected by a decision is allowed some level of input into that decision. Second, organization activities are integrated on all levels and between all levels. Third, organizational activities facilitate the on-going learning of all employees. Fourth, the organization is capable of dealing with continual change in both the external and internal environments, change that is occurring with increasing rapidity.

How do we design an organization that has these characteristics, shaping the involved organization processes in such a way that they support the highest possible level of productivity? First, turn support functions into profit centers. They sell their service to production units. This is a bad idea, right? Without competition they would be free to overcharge. But what if production units were free to buy the involved service from an outside supplier if that supplier was cheaper?  Input Units would then be forced to compete. Also, under this arrangement, because they were now profit centers, Input Units could sell their services to other companies so long as no conflict of interest existed, thus improving corporate profits.

Second, reshape the reward system so that it encourages all the desired systemic organizational characteristics. The “Three-Tiered Reward System” fits well with this model. All employees receive salaries that will constitute the smallest part of their reward during good times and will allow employees and families to survive during bad times. All Output and Input Unit employees receive a share of a percentage of their unit’s profits.  Finally, all employees will receive a company-wide bonus, one normally comprising the largest part of their reward in order to keep employees from focusing on the productivity of their individual units rather than on the productivity of the organization as a whole, in order to encourage organization-wide cooperation and integration.  In this model, upper level salaries will be supported by a tax levied on each unit’s profits. Members of upper level management will be eligible to share in the company-wide bonus which will also be drawn from the unit tax revenues.

Third, decision making will be turned over to a hierarchy of “boards.” Each manager, starting at lowest level will have a “board of directors” on which he or she sits. Other members of each board include the manager’s direct reports, be they low level workers or other managers, and the boss of the manager whose board it is. The direct reports, if they are also managers, of course have their own boards and bring along input from their direct reports who also have boards. The boss, as well, has his or her own board on which the boss’ boss sits, bringing along input from his or her boss who sits on his or her board. As a result, any manager above the lowest level receives input, direct or indirect, from three levels below and three levels above.  Boards can also invite representatives from other units who might make a contribution to take part in meetings. Obviously, this approach encourages both participation and the integration of efforts.

Each board’s responsibilities will include:

2. Planning for the unit whose board it is.
3. Policy making for the unit whose board it is
4. Coordinating the plans and policies of the immediate lower level.
5. Integrating the board’s plans and policies with those of lower level and higher-level units.
6. Improving the quality of work life of those the level board governs.
7.  Evaluate on an on-going basis the performance of the manager whose board it is.

What these level boards do, of course, is take over the major responsibilities of management. The manager whose board it is becomes mainly a facilitator, making sure that the board’s efforts remain focused on the organization’s long-term objectives, facilitating and helping integrate the efforts of his or her board with those of other boards.

Read the Full Journal Article

Enhancing Solutions through Developing Social Capital

There is value in our social networks beyond that which serves our immediate needs. Social capital is the ability to use social networks to accomplish something that cannot be done alone. Business social networks are commonly used in areas ranging from product development to supply-chain management. On a wider scale, social capital can be matched with open innovation through appropriate Internet and physical channel expansions to develop something new for economic development. 

We must only think of how each person enters an economic system through their own particular way of viewing the world. They are defined by their background, education, skill set, cultures, experiences and social networks to view topics from a particular vantage point. Problems are defined based upon how they understand them through historically perceived practical solutions.

As these elements begin to act and interact with each other they create new definitions on how to see problems and potential solutions. The longer they interact solving a significant problem the more likely they will share mutual definitions and perspectives. It is a process of social learning and thought construction based in social construction mechanisms of elemental interaction. 

Few relevant solutions come from a single vantage point. All sustainable solutions are socially negotiated to develop new premises and conclusions. It is the changing of perspective, a focus on the solution, and the enactment of a plan that changes the reality of network members. Philosophical reality can be defined as a perspective of communicated why and why nots that enhance shared explanations.

With open-mindedness and active listening people begin to adjust their perspective and understand the factors in new and unique ways. This adjustment often leads to new solutions for complex problems and greater heights of awareness for involved members. It becomes something bigger than themselves that leads to enlightenment about the nature of life and best paths forward for a people, organization, city or nation. 

Mathews and Marzec (2012) studied social capital from varying industry perspectives and developed a model that fits well with operational management. One can see the similarities on how it applies to wider platforms and networks that improve upon social innovation and economic development. Using relational, cognitive, and structural capital it is possible to enhance HR practices to turn initial social capital into resulting social capital that produces meaningful solutions for a wide group of stakeholders. 

Brookes, N. et al., (2007) Analyzing social capital to improve product development team performance: action-research investigations in the aerospace industry with TRW and GKN. IEEE Transactions on Engineering Management, 54 (4), 814–830.

Choo, A. et. al. (2007) Method and context perspectives on learning and knowledge creation

in quality management. Journal of Operations Management, 25 (4), 918–931.

Cousins, P.D., et al., (2006). Creating supply chain relational capital: the impact of formal and informal socialization processes. Journal of Operations Management, 24 (6), 851–863.

Granovetter, M. (1973). The strength of weak ties. American Journal of Sociology, 78 (6), 1360–1380.

Mathews, R. & Marzec, P. (2012). Social capital, a theory for operations management: a systematic review of the evidence. International Journal of Production Research, 50 (24). 

Singer, M. et. al. (2008). A static model of cooperation for group-based incentive plans.

International Journal of Production Economics, 115 (2), 492–501.

Policy and Infrastructure Improves National Growth

The development of nations occurs on a constant basis. The policies leaders put in place have a huge impact on the success of any nation and can have long-lasting impacts. A paper by Carmignani & Chowdhury (2010) discusses how specific and broad focus impacts growth. They elaborate on four scenarios of development and the outcomes of each. 

Positive Growth and Decreasing Inequality: Occurs when there is growth in the economy but greater mobility of the classes. 

Positive Growth and Increasing Inequality: Occurs when there is growth in the economy but that growth impacts one class over another. 

Negative Growth and Decreasing Inequality: Occurs when growth is negative but there is greater mobility among the classes. 

Negative Growth and Inequality: Occurs when growth is negative but it impacts one class over another. 

The authors found through their analysis that strong policies and infrastructure improvements help create the right opportunities for a positive growth and decreasing inequality situation. Countries are not limited by their geographical locations, resources, or population. Any country can improve their standing by having the right policies and infrastructure.

Policies have legal implications for businesses and help create an environment for growth. The way in which companies structure, operate and develop are based in part on how they work within particular environments. Policies should focus on business and employment growth and ensure that the environment allows for proper wealth distribution and class mobility. 

Likewise, the infrastructure of a nation naturally can impact the success of business within a particular environment. Proper infrastructure will help ensure that products move quickly, information is transferred appropriately, and money moves easily. Infrastructure encourages growth from the foundations of an economy.

Carmignani, F. & Chowdhury, A. (2011). Four scenarios of development and the role of economic policy. Journal of Developmental Studies, 47 (3).