Nigel Slack, author of The Operations Advantage, discusses several methods to have a successful operations strategy
You will find there’s common misunderstanding about operations strategy: that it serves to employ the selections passed on by whoever is formulating business strategy. Although implementing business strategy top-down is but one part of operations strategy, it is just one among four elements that has to be present if any operations strategy is in order to work. These elements are illustrated within the diagram below.
These elements is often a necessary condition to build up a very strategic operation. These four elements (or perspectives) on operations strategy are discussed in more detail below.
Top-Down: Operations must directly reflect the business’ overall strategy
Operations is but one amongst many functions that should be aligned with business strategy and pull within the same strategic direction. Deriving an Operations management Books coming from a business strategy will never be an easy planning activity. Through the translation from business to operations strategy, all the ambiguities and conflicts which can be buried within most businesses strategies will probably be exposed and definately will must be resolved. Business strategies are painted in broad brushstrokes. They point the organization in a general direction, but cannot disclose everything; that maybe what functional strategies are suitable for. Operations strategy should take the overall thrust of economic strategy and translate it into what it path for the operation’s resources and operations. In other words, is there a clear correspondence between your business plus your operations strategy? Therefore making a strong, logical and explicit link between all the activities with the operation and the business strategy in which it operates. Besides this vertical logic from business to operations strategy, operations strategy should also be coherent with itself and the strategies other functions pursue.
Outside-In: Operations must give you a position for your business rolling around in its markets
Operations could be the supplier to the markets. It will help establish and look after its desired market position through providing the levels of service, innovation and price that outclasses, at least maintains with, competitors. The important thing question to inquire about should be, ‘how well do our operations help the business compete rolling around in its markets?’ While straightforward, the hitch could be that the concepts, language and (somewhat) philosophy used to help marketers understand markets are not always valuable in guiding operations. Consequently descriptions of market needs often need ‘translating’ before they could be useful to operations. The partnership between markets and the operations that serve them isn’t merely a few markets dictating how operations should behave. Customers will behave, at least partly, how you (maybe competitors) have treated them in the past. It is always a two-way street between your markets plus your operations.
Bottom-Up: Operations must get strategic advantage by gaining knowledge through daily experience
Not all decisions which may have long-term strategic importance come top-down from senior management. Important ideas can emerge from seemingly routine activities that occur within operations. An enterprise can move around in a certain strategic direction as their on-going example of serving customers in an operational level convinces them that it is the right move to make, a general consensus emerges, often from the operational level of the organisation. Letting strategic ideas emerge from the operational level of a small business isn’t abdicating responsibility; it really is accepting that extraordinary ideas comes from those that work at the sharp end. It would be a dereliction of duty if a person did not do everything easy to encourage good ideas from daily experience. Every action, every decision, every transaction created by your operation’s processes, is an opportunity to include in existing knowledge.
Inside-Out: Operations must develop the strategic capabilities of the company’s resources and operations
The important thing question here’s, ‘what can your operation make it happen the competitors can’t?’ In other words, just how can one’s operations bring something unique on the business’ capabilities? For too many businesses, the reply is that it can’t. But even though one’s operation doesn’t have a unique capabilities, it should at least be striving to realize some kind of advantage from its resources and operations. Thus, two further questions are relevant: what resources and operations should be adding to building capabilities? And: how are the decisions which can be made inside the operation adding to developing and supporting these capabilities? Try asking several questions with the so-called VRIO framework[i].
Have you got valuable operations capabilities?
Have you got rare operations capabilities?
Have you got operations capabilities which can be expensive for imitate?
Do you think you’re organized to capture the price of operations capabilities?
The inside-out component of operations strategy should make an effort to be sure that resources and operations are valuable, rare, inimitable, and that the operation is organised to use them. Keep in mind that each one of these situations are time dependent. A capability could possibly be valuable now, but competitors are not likely to stand still.
[i]In, Barney, J. B. (1995). Looking Inside for Competitive Advantage. Academy of Management Executive, Vol. 9, Issue 4, pp. 49-61
About the author: Nigel Slack is Emeritus Professor of Operations Management and Strategy at Warwick Business School and the former head of the company’s Operations Management Group. He acts as a consultant in several sectors, including Financial Services, Utilities, Retail, Professional Services, General Services, Aerospace, FMCG, and Engineering Manufacturing.
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