Matrix Composition

Watch this first, “Matrix algebra as composition.” A firm is a sequence of matrix multiplications. When we do anything, we are left with a need for each transformation, a sequence of such, and the evolution of that sequence over time. Your fast followers won’t match your evolution, and they won’t match your sequence, your composition. They will start somewhere else, and go directly to the product emerging from your composition. The fast follower will duplicate your output without duplicating your firm.

In the competition, if you insist on calling it that, your output fits your customers and hopefully it fits your near-term prospects, the prospects on the next pragmatism step. Your output doesn’t fit your competitor’s customers. Notice that your feedback only fits your existing customers, aka your economies of scale. We consume our market allocation at times in seats and at other times in dollars in addition to seats. We do not consume our competitor’s market allocation. We convert our prospects into buyers of the system, then we immediately market to them as repeat, continuing customers.  This latter part is where software companies captured their increasing return. If the marketing does not bifurcate, we’re selling a product with very high upgrade costs. More money sure, but bad money.

With discontinuous innovations, we start off with a client, just one, but a firm, not a single individual, with a wide width of use cases to cover. We start with a lot of potential. We picked that client with our bowling ally strategy in mind. We pick one in the middle of the industrial classification tree, so we can move up or down the tree as we go. That enables us to span not just the firm, but the whole industry, the whole ecology, the whole value proposition. Eventually, we will be in a simpler place described in the previous paragraph. But, our composition in matrix terms is deep. Our fast followers are thin. So keep your cards to yourself and fake the tells, so the competition chases it’s imaginary illusions, instead of you.

The differences across the technology adoption lifecycle are immense. We hire for each function, we tune each function, then we cross a technology phase boundary, and change the focus of our functionality. Call this later thing forgetting. But, that means we cannot repeat the function in the future when the demand for another discontinuity requires it. Apple is stuck now. The length of time that a company is stuck is a reflection of how much it forgot. Repeated discontinuous innovation requires remembering, rather than forgetting. Repeated discontinuous innovation requires an organizational structure that can improve it’s processes and it’s customer knowledge. Not the stuff of innovation consultants. Even if Christensen suggested it long before his effect-cause confused disruption idea became the rage. The cost accountants couldn’t go there. So the organizational structure required goes unaddressed.

But, what of Christensen’s separation as he called it? Everyone is probably thinking separation as in spin outs or it’s cousins. But, there is another way to separate. It’s hard work. It doesn’t anchor itself to economies of scale. Discontinuous innovations require new markets that might merge , or not, decades down the road into one of the company’s economies of scale. The company has a tempo modulating continuous innovation with discontinuous innovations. The former serving existing customers. The latter finding new never before addressed customers.

Software as media provides a hint. In the software as media model, we split the carrier from the carried. The distinction is difficult at times. What is strictly speaking about the carrier, the software, and what is about the content of the domain? Addition is a carrier (red) of the carried things being added (blue), so 01+01=10. But, if it something carrier being added, like loop indexes, the whole thing would be carrier. as in 01+01=10.

An organization is also a media, so it has carrier and carried layers. The carried layer would be focused on the customer. The carrier layer would be focused on things that don’t require customer inputs like the process of shipping goods to the customer. The staff that had customer relationships would flow through the firm with the customers. The staff that had process knowledge would stay in the phase specific organizations and keep improving those phase specific processes.

The technologies would flow through the organization as well. The technology would  be productized at the B2B early adopter client engagement. The technology and the product would then flow into the vertical phase, then the IT horizontal phase, and beyond. But, when the bowling alley has a free lane the next technology would take it. The processes across the phase specific divisions would be fully loaded all the time as would the staff attending to those processes.

The IT horizontal oscillation switches the focus from the carried to the carrier and the next adoption phase shifts the focus back to the carried. In this situation, the customer specific staff would not be fully loaded, but would have time to gain more in depth knowledge of the domain constituting the carried.

A company organized in such a way would have to manage the separation. Cross talk between the managers in the different phases needs to be suppressed. A best practice in the tornado, “free,” doesn’t work beyond the tornado. Sales reps love tornados, but tornado sales forces are unlike the sales forces serving both retained customers and new prospects. “Free” fails in all other contexts except the merger tornado.

Each phase has its own operational foci. A factor analysis of each would reveal that those organizations in a specific phase are alike, and different from the organizations in all the other phases. Each organization has it’s own factor analysis: as in factors and factor weights. The parent company would look like a holding company and have holding company problems like understanding that there are no synergies across the held organizations.

But, I’ve thought about this long enough.

Know where you are. Don’t do what everybody else is doing, particularly those companies that don’t know where they are. Know that funding phases are not synchronized with adoption phases. Many of those so called technology companies are not technology companies at all. Most of them are technology users, not technology makers. They are coding content, not carrier. They are doing continuous innovation and throwing away the results from discontinuous possibilities because the hyperbolic realities don’t look like the familiar spherical geometries they are use to. Yeah, I know, too much.





One Response to “Matrix Composition”

  1. The Grid | Product Strategist Says:

    […] Beyond the orthodoxy. « Matrix Composition […]

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