Nigel Slack, author of The Operations Advantage, discusses some ways to achieve a successful operations strategy
There is a common misunderstanding about operations strategy: which it serves to apply the decisions handed down by whoever is formulating business strategy. Although implementing business strategy top-down is a part of operations strategy, it is merely among four factors that should be present or no operations approach is in order to work. These components are illustrated within the diagram below.
Each of these elements is a necessary condition to build up 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 a amongst many functions that ought to be aligned with business strategy and pull within the same strategic direction. Deriving an Buy Operations management Books from a business strategy are not an easy planning activity. Throughout the translation from business to operations strategy, all the ambiguities and conflicts which are buried within most businesses strategies will probably be exposed and can need to be resolved. Business strategies are painted in broad brushstrokes. They point the organization in the general direction, but cannot spell out all the info; it is precisely what functional strategies are for. Operations strategy should take the typical thrust of commercial strategy and translate it into what it really path for the operation’s resources and procedures. Put simply, exactly what is the clear correspondence between business and your operations strategy? This implies making a strong, logical and explicit outcomes of all the activities with the operation and the business strategy that 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 supply a position for your business in the markets
Operations will be the supplier to the markets. It will help establish and keep its desired market position through providing the degree of service, innovation and expense that outclasses, or at least maintains with, competitors. The important thing question to inquire about ought to be, ‘how well do our operations help the business compete in the markets?’ While straightforward, the hitch is that the concepts, language and (somewhat) philosophy utilized to help marketers understand markets are not invariably attractive guiding operations. Consequently descriptions of market needs often need ‘translating’ before they are often beneficial to operations. The relationship between markets and the operations that provide them isn’t just a matter of markets dictating how operations should behave. Customers will behave, at the very least partly, on how you (or perhaps your competitors) have treated them before. It will always be a two-way street between markets and your operations.
Bottom-Up: Operations must get strategic advantage by gaining knowledge from daily experience
Not every decisions which 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 transfer a specific strategic direction since their on-going connection with serving customers with an operational level convinces them that it is the right course of action, then a general consensus emerges, often from your operational level of the organisation. Letting strategic ideas leave the operational level of a company isn’t abdicating responsibility; it’s accepting that extraordinary ideas comes from people that just work at the sharp end. It will be a dereliction of duty if someone would not try everything simple to encourage plans from daily experience. Every action, every decision, every transaction produced by your operation’s processes, is an opportunity to enhance existing knowledge.
Inside-Out: Operations must enjoy the strategic capabilities of its resources and procedures
The important thing question this is, ‘what can your operation do that the competitors can’t?’ Put simply, just how do one’s operations bring something unique for the business’ capabilities? For way too many businesses, the answer is which it can’t. But even if one’s operation doesn’t have a unique capabilities, it ought to at the very least be striving to realize some type of advantage from the resources and procedures. Thus, two further questions are relevant: what resources and procedures ought to be adding to building capabilities? And: how would be the decisions which are made inside operation adding to developing and supporting these capabilities? Try asking some questions with the so-called VRIO framework[i].
Are there valuable operations capabilities?
Are there rare operations capabilities?
Are there operations capabilities which are expensive to imitate?
Have you been organized to capture value of operations capabilities?
The inside-out portion of operations strategy should try and be sure that resources and procedures are valuable, rare, inimitable, understanding that the procedure is organised to use them. Understand that these the situation is time dependent. A capability could possibly be valuable now, but competitors are not going to be 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 its Operations Management Group. He acts as a consultant in many sectors, including Financial Services, Utilities, Retail, Services, General Services, Aerospace, FMCG, and Engineering Manufacturing.
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