Nigel Slack, author from the Operations Advantage, discusses the 4 methods to gain a successful operations strategy
There is a common misunderstanding about operations strategy: which it serves to employ the decisions transferred by whoever is formulating business strategy. Although implementing business strategy top-down is a important role of operations strategy, it is simply among four factors that has to be present if any operations strategy is to work. These factors are illustrated inside the diagram below.
Each one of these elements can be a necessary condition to build up a very strategic operation. These four elements (or perspectives) on operations strategy are discussed at length below.
Top-Down: Operations must directly reflect the business’ overall strategy
Operations is a amongst many functions that need to be aligned with business strategy and pull inside the same strategic direction. Deriving an Operations management Books from a business strategy will never be a straightforward planning activity. Throughout the translation from business to operations strategy, every one of the ambiguities and conflicts which might be buried within most businesses strategies will be exposed and can need to be resolved. Business strategies are painted in broad brushstrokes. They point the business enterprise in the general direction, but cannot show everything; it is exactly what functional strategies are for. Operations strategy must take the overall thrust of business strategy and translate it into what it opportinity for the operation’s resources and operations. Quite simply, is there a clear correspondence involving the business plus your operations strategy? This means building a strong, logical and explicit outcomes of every one of the activities with the operation along with the business strategy that it operates. Besides this vertical logic from business to operations strategy, operations strategy also need to be coherent with itself along with the strategies other functions pursue.
Outside-In: Operations must give you a position for the business rolling around in its markets
Operations will be the supplier to its markets. It should help establish and look after its desired market position by offering the degree and services information, innovation and cost that outclasses, or otherwise keeps up with, competitors. The key question to question ought to 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 (to some degree) philosophy used to help marketers understand markets are not always beneficial in guiding operations. This means that descriptions of market needs often need ‘translating’ before they may be necessary to operations. The partnership between markets along with the operations that provide them isn’t simply a few markets dictating how operations should behave. Customers will behave, at the very least partly, on how you (maybe competitors) have treated them in the past. It will always be a two-way street involving the markets plus your operations.
Bottom-Up: Operations must get strategic advantage by learning from daily experience
Don’t assume all decisions which may have long-term strategic importance come top-down from senior management. Important ideas can leave seemingly routine activities that happen within operations. A company can relocate a particular strategic direction his or her on-going experience of serving customers with an operational level convinces them that it is the right action to take, then the general consensus emerges, often in the operational degree of the organisation. Letting strategic ideas leave the operational degree of an enterprise isn’t abdicating responsibility; it really is accepting extraordinary ideas will come from those that act on the sharp end. It would be a dereliction of duty if one didn’t fit everything in easy to encourage ideas from daily experience. Every action, every decision, every transaction made by your operation’s processes, is an opportunity to add to existing knowledge.
Inside-Out: Operations must enjoy the strategic capabilities of the company’s resources and operations
The key question the following is, ‘what can your operation accomplish that the competition can’t?’ Quite simply, just how can one’s operations bring something unique to the business’ capabilities? For too many businesses, the solution is which it can’t. But even though one’s operation does not have any unique capabilities, it ought to at the very least be striving to get some form of advantage from the resources and operations. Thus, two further questions are relevant: what resources and operations ought to be contributing to building capabilities? And: how include the decisions which might be made from the operation contributing to developing and supporting these capabilities? Try asking the 4 questions with the so-called VRIO framework[i].
Are there valuable operations capabilities?
Are there rare operations capabilities?
Are there operations capabilities which might be harmful for imitate?
Have you been organized to capture the need for operations capabilities?
The inside-out component of operations strategy should attempt to make sure that resources and operations are valuable, rare, inimitable, which the procedure is organised to exploit them. Understand that these the situation is time dependent. A capability could possibly be valuable now, but competition is not likely to square 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 writer: Nigel Slack is Emeritus Professor of Operations Management and Strategy at Warwick Business School along with the former head of the company’s Operations Management Group. He provides for a consultant in numerous sectors, including Financial Services, Utilities, Retail, Services, General Services, Aerospace, FMCG, and Engineering Manufacturing.
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