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"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

- Aristotle

Operations: implementing strategy

Posted by Grant Brewer on 03 Apr 2007

Operations is what a company does. It is the core. Strategy tells us what we're going to do and how we might be doing it - operations gets down to the doing and actually implements a strategy. It is easy in conversations about strategy to lose sight of the fact that all strategies need to be implemented otherwise they remain concepts or ideas. No business can be successful by focusing only on building strategy. At some point every organisation (even a non-commercial organisation) has to implement.

Operational strategy describes the process of planning the implementation and actually implementing a strategy into the core of the business: its operations. The tools and techniques of operational strategy are varied and numerous. However, some of the recent trends are worth thinking about as a leader.

Lean operations create efficiency

In the last two decades, the concept of lean and agile operations has come to the fore. Lean operations, a evolution of lean manufacturing techniques typified by highly efficient Japanese manufacturers in the late eighties, extends the ideas to all product or service organisations (and not only manufacturing). It is focused on making business operations as efficient as possible: reduce inventory, reduce opportunity cost, reduce wasted time, deliver work "just in time". More recently the idea of lean operations has been championed by the Six Sigma movement which focuses on improving processes to reduce the likelihood of errors. Today, the epitome of a lean operating company is Toyota, which has turned the manufacturing efficiency of its past almost into an art.

Agile operations create flexibility from effeciency

Agile operations mark a progression from the focus on efficiency. In the current global economy, it is not enough to be efficient. Organisations also need to be flexible and adaptable, able to respond to the rapidly changing market and global economy. Turning innovations into real products or services, constant process improvement, changing business partners, and changing competitor landscapes are all features of an agile world that business operations need to be able to deal with. Organisations that are focused on making their products or delivering their services to order, directly for a specific customer, are classic examples of agile operations. Perhaps surprisingly, not all service organisations are really operating with true agility - often their services are standardised and delivered as if from inventory rather than make to order for each client.

Of course, neither approach is better and most companies are not purely lean or agile (and it is possible to have aspects of both in your organisation). In most organisations, there is a combination of approach that blends with the culture of the organisation and the capabilities of its people.

Don't forget your people

Unless you're fortunate enough to operate an entirely automated business, people will the most common and probably the most valuable component in your operation. Getting people to have a clear focus and to do the right things, and do them well, is not as easy as it sounds. Whether you're dealing with the challenges of an executive crisis or challenged by unions on a factory floor, people can be the most rewarding and simultaneously frustrating management challenge. To successfully lead an operation, you're going to have to get on top of the people issues. Just don't ignore them: people are the most important part of the process.

One aspect of people management often overlooked in operational strategy, where the focus is frequently on the hard tangible aspects of service delivery or manufacturing, is communication. People can't do the right things if they are not aware of what the right things are. A constant conversation on the state of operations, the requirements, the expectations, the challenges, the frustrations and the solutions will lead to better informed team members. Transparency is a great way to start empowering people: letting them in on the decisions and on the information lets them understand why things are happening, allowing them to make better decisions and become more accountable.

Get people to understand the business

The best operations teams are made up of people that understand their products or services. They understand what the organisation does. This may seem like a obvious thing to state, but it is (alarmingly) common to find people at all levels of business (including senior management) that don't really understand their products or how they are really delivered.

A good place to start is to map the processes. It doesn't need to be done by consultants. Get your team to do it themselves as they will learn a lot about what they do - and so will you. Work out how the business process flows, where does the information come from and where does it go, where are decisions made, where does the cash flow and where does the value come from? Understanding what drives costs, what creates value and how fast cash moves through the process is critical to effective operational management. One of the by-products of doing it yourself is that it will create a common understanding of processes, the products and the services. A common understanding is a terrific platform for process improvement. Another key shift that could result is that you'll start managing the business by process instead of by geography or product.

This process knowledge will also enable you to manage innovation because you will be able to identify the areas where new ideas are most necessary and be able to assess better the likelihood that the innovation will succeed.

Most business processes touch the customer at some point - so defining and understanding business processes is a good way to understand the customer. Define what the customer values, how do they work with you, what is their experience like? A similar set of ideas applies to business partners. It is important to go beyond the "value proposition" statements in the "vision" - it may seem as thought customers value "technological leadership" when what they really value is a VCR (or PVR) that can be programmed easily. Operations people understand the difference.

Aim at a common & clear understanding

Having a clear and common understanding of the processes and people leaves you better able to set objectives and measure progress, in a manner that matches the strategic view of overall organisation. Operations is perhaps not seen as the glamorous side of business strategy, but it is equally important because it is where the doing gets done.

Operations: implementing strategy was published in Intelligence Magazine as Strategym #47 in April 2007.

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Essays | Strategy | Intelligence Strategym

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implementation (10) | execution (3) | innovation (3) | operations (2) | lean solutions (1) | business process (1) | agile operations (1)

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