Nigel Slack, author in the Operations Advantage, discusses some techniques to gain a successful operations strategy
There exists a common misunderstanding about operations strategy: that it serves to try the choices handed down by whoever is formulating business strategy. Although implementing business strategy top-down is one natural part of operations strategy, it is just one among four factors that should be present if any operations approach is to work. These elements are illustrated within the diagram below.
Each of these elements can be a necessary condition to produce a truly 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 one amongst many functions that need to be aligned with business strategy and pull within the same strategic direction. Deriving an Operations management Books coming from a business strategy will not be a straightforward 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 can should be resolved. Business strategies are painted in broad brushstrokes. They point the business inside a general direction, but cannot spell out every detail; it is exactly what functional strategies are suitable for. Operations strategy should take the thrust of business strategy and translate it into just what it path for the operation’s resources and processes. In other words, is there a clear correspondence involving the business and your operations strategy? This implies building a strong, logical and explicit link between all the activities with the operation and also the business strategy where it operates. Besides this vertical logic from business to operations strategy, operations strategy also needs to be coherent with itself and also the strategies other functions pursue.
Outside-In: Operations must give you a position for that business in their markets
Operations is the supplier to its markets. It must help establish and look after its desired market position by providing the degree of service, innovation and expense that outclasses, or at best maintains with, competitors. The important thing question must must be, ‘how well do our operations conserve the business compete in their markets?’ While straightforward, the hitch would be that the concepts, language and (to some degree) philosophy utilized to help marketers understand financial markets are not always useful in guiding operations. This means that descriptions of market needs often need ‘translating’ before they are often necessary to operations. The connection between markets and also the operations that serve them isn’t simply a a few markets dictating how operations should behave. Customers will behave, no less than partly, about how you (or perhaps your competitors) have treated them in the past. It is usually a two-way street involving the markets and your operations.
Bottom-Up: Operations must get strategic advantage by gaining knowledge through daily experience
Its not all decisions who have long-term strategic importance come top-down from senior management. Important ideas can emerge from seemingly routine activities which occur within operations. A business can move around in a specific strategic direction because their on-going experience with serving customers with an operational level convinces them that it is the right action to take, then this general consensus emerges, often from your operational degree of the organisation. Letting strategic ideas emerge from the operational degree of a company isn’t abdicating responsibility; it is accepting exceptional ideas will come from those that work at the sharp end. It could be a dereliction of duty if one didn’t fit everything in simple to encourage good ideas from daily experience. Every action, every decision, every transaction manufactured by your operation’s processes, is an opportunity to include in existing knowledge.
Inside-Out: Operations must develop the strategic capabilities of the resources and processes
The important thing question here is, ‘what can your operation do this your competitors can’t?’ In other words, how can one’s operations bring something unique towards the business’ capabilities? For a lot of businesses, the reply is that it can’t. But regardless of whether one’s operation does not have unique capabilities, it should no less than be striving to get some kind of advantage from the resources and processes. Thus, two further questions are relevant: what resources and processes must be leading to building capabilities? And: how will be the decisions which can be made inside the operation leading to developing and supporting these capabilities? Try asking some 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 to imitate?
Are you organized to capture the price of operations capabilities?
The inside-out component of operations strategy should try to ensure that resources and processes are valuable, rare, inimitable, and that the procedure is organised to use them. Keep in mind that every one of these situations are time dependent. A capability might be valuable now, but competition is improbable 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 me: Nigel Slack is Emeritus Professor of Operations Management and Strategy at Warwick Business School and also the former head of the Operations Management Group. He behaves as a consultant in lots of sectors, including Financial Services, Utilities, Retail, Services, General Services, Aerospace, FMCG, and Engineering Manufacturing.
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