Ninety percent of all strategic plans are not implemented as intended. This is because companies have difficulties aligning their operations initiatives and plans with their strategic goals. Likewise, more emphasis needs to be put on monitoring operational performance, using the right metrics that impact the targets set by the overall business goals.
Until recently, very little attention has been given to "operationalizing" business strategies. It has been assumed that operations managers would do their jobs well, and their functions would be managed adequately. But several factors—complexity, volatility, differentiation, sales and marketing channels, and speed to act—have led to a much larger need to evaluate operations.
Unless companies have a well-defined and comprehensive strategy for operations, they will fail to enable the business strategies to be achieved effectively and efficiently.
At its basic sense, business strategies are about three distinct choices:
- What businesses should we be in, and what products will we sell?
- Who will we target to sell these to?
- Why will they buy our products?
At its basic level, then, operations strategies are about:
- What capabilities do we need to deliver these products to these markets efficiently and effectively, so that the business strategies will be achieved?
Thus, operations strategy is determining "how" companies will operate their supply chains and their customer services to achieve business goals and strategies. This involves major decisions about assets, locations, processes, people, technologies, and inventory policies. In effect, it aligns the execution capability with the strategies.
Determining how best to compete on operations, and the right initiatives to achieve and sustain advantages, are matters of strategic choice. Developing the right operations strategy for the business is the right challenge.
The new paper, "From Business Strategies to Operations: How to Align Execution with Strategic Plan," discusses how develop a strategy and structure that will allow companies to implement the right operations strategy. Download the paper here.
Also, read the earlier paper on "Employing Available Capital Wisely: How Operational Excellence Creates Economic Value."