Nigel Slack, author with the Operations Advantage, discusses the 4 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 down by whoever is formulating business strategy. Although implementing business strategy top-down is a natural part of operations strategy, it is just one of four elements that must be present if any operations approach is in order to work. These components are illustrated from the diagram below.
Each of these elements is a necessary condition to produce a truly strategic operation. These four elements (or perspectives) on operations strategy are discussed in greater detail 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 from the same strategic direction. Deriving an Operations management Books from the business strategy are not a simple planning activity. Throughout the translation from business to operations strategy, all the ambiguities and conflicts which can be buried within most businesses strategies will be exposed and will have to be resolved. Business strategies are painted in broad brushstrokes. They point the organization in a general direction, but cannot spell out everything; it is precisely what functional strategies are suitable for. Operations strategy should take the thrust of business strategy and translate it into just what it opportinity for the operation’s resources and operations. Quite simply, exactly what is the clear correspondence involving the business plus your operations strategy? This implies building a strong, logical and explicit link between all the activities from the operation along with the business strategy where it operates. Besides this vertical logic from business to operations strategy, operations strategy also needs to be coherent with itself along with the strategies other functions pursue.
Outside-In: Operations must provide a position for your business rolling around in its markets
Operations will be the supplier towards the markets. It should help establish and look after its desired market position through providing the levels and services information, innovation and price that outclasses, at least keeps up with, competitors. The true secret question must ought to be, ‘how well do our operations profit the business compete rolling around in its markets?’ While straightforward, the hitch is that the concepts, language and (to some extent) philosophy utilized to help marketers understand financial markets are not at all times useful in guiding operations. This means that descriptions of market needs often need ‘translating’ before they can be helpful to operations. The connection between markets along with the operations that provide them isn’t simply a couple of markets dictating how operations should behave. Customers will behave, at the very least partly, how you (maybe competitors) have treated them in the past. It usually is a two-way street involving the markets plus your operations.
Bottom-Up: Operations must get strategic advantage by gaining knowledge through daily experience
Its not all decisions that have long-term strategic importance come top-down from senior management. Important ideas can leave seemingly routine activities which occur within operations. A company can relocate a certain strategic direction his or her on-going experience of serving customers within an operational level convinces them that it is the right thing to do, then the general consensus emerges, often from the operational amount of the organisation. Letting strategic ideas leave the operational amount of a business isn’t abdicating responsibility; it really is accepting exceptional ideas comes from those that just work at the sharp end. It will be a dereliction of duty if someone failed to 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 include in existing knowledge.
Inside-Out: Operations must develop the strategic capabilities of its resources and operations
The true secret question here is, ‘what can your operation do this the competition can’t?’ Quite simply, how do one’s operations bring something unique for 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 any unique capabilities, it ought to at the very least be striving to realize some kind of advantage from its resources and operations. Thus, two further questions are relevant: what resources and operations ought to be adding to building capabilities? And: how include the decisions which can be made from the operation adding to developing and supporting these capabilities? Try asking the 4 questions from 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 harmful for imitate?
Are you organized to capture value of operations capabilities?
The inside-out component of operations strategy should make an effort to make sure that resources and operations are valuable, rare, inimitable, and that the operation is organised to use them. Keep in mind that all these everything is time dependent. A capability could be valuable now, but competition is unlikely 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 me: Nigel Slack is Emeritus Professor of Operations Management and Strategy at Warwick Business School along with the former head of its Operations Management Group. He acts as a consultant in lots of sectors, including Financial Services, Utilities, Retail, Expertise, General Services, Aerospace, FMCG, and Engineering Manufacturing.
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