Nigel Slack, author of The Operations Advantage, discusses the 4 solutions to achieve a successful operations strategy
There’s a common misunderstanding about operations strategy: it serves to try the selections handed down by whoever is formulating business strategy. Although implementing business strategy top-down is a important role of operations strategy, it is simply certainly one of four factors that should be present or no operations method is to be effective. These components are illustrated in the diagram below.
Each one of these elements can be a necessary condition to produce a totally 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 should be aligned with business strategy and pull in the same strategic direction. Deriving an Kogan Page Operations management Books coming from a business strategy are not a basic planning activity. Through the translation from business to operations strategy, all of the ambiguities and conflicts that are buried within most businesses strategies is going to be exposed and may must be resolved. Business strategies are painted in broad brushstrokes. They point the company in the general direction, but cannot spell out everything; that is what functional strategies are for. Operations strategy should take the typical thrust of economic strategy and translate it into exactly what it opportinity for the operation’s resources and procedures. In other words, what is the clear correspondence between business as well as your operations strategy? What this means is building a strong, logical and explicit eating habits study all of the activities of 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 supply a position to the business in the markets
Operations may be the supplier to the markets. It should help establish and maintain its desired market position through providing the degrees of service, innovation and cost that outclasses, or otherwise maintains with, competitors. The true secret question to inquire about ought to be, ‘how well do our operations assist the business compete in the markets?’ While straightforward, the hitch would be that the concepts, language and (to some extent) philosophy employed to help marketers understand finance industry is not at all times beneficial in guiding operations. This means that descriptions of market needs often need ‘translating’ before they could be useful to operations. The connection between markets and also the operations that serve them isn’t merely a a few markets dictating how operations should behave. Customers will behave, no less than partly, on how you (or maybe your competitors) have treated them before. It is usually a two-way street between markets as well as your operations.
Bottom-Up: Operations must get strategic advantage by gaining knowledge from daily experience
Its not all decisions which may have long-term strategic importance come top-down from senior management. Important ideas can leave seemingly routine activities that occur within operations. A small business can move in a selected strategic direction as their on-going experience of serving customers with an operational level convinces them that it is the right move to make, then this 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’s accepting that extraordinary ideas may come from those who just work at the sharp end. It might be a dereliction of duty if an individual didn’t fit everything in very easy to encourage guidelines from daily experience. Every action, every decision, every transaction made by your operation’s processes, is an opportunity to enhance existing knowledge.
Inside-Out: Operations must develop the strategic capabilities of the company’s resources and procedures
The true secret question here’s, ‘what can your operation do that your competition can’t?’ In other words, just how can one’s operations bring something unique towards the business’ capabilities? For a lot of businesses, the reply is it can’t. But even though one’s operation doesn’t have a unique capabilities, it should no less than be striving to realize some form of advantage by reviewing the resources and procedures. Thus, two further questions are relevant: what resources and procedures ought to be contributing to building capabilities? And: how would be the decisions that are made inside the operation contributing to developing and supporting these capabilities? Try asking the 4 questions of the so-called VRIO framework[i].
Have you got valuable operations capabilities?
Have you got rare operations capabilities?
Have you got operations capabilities that are harmful for imitate?
Have you been organized to capture value of operations capabilities?
The inside-out component of operations strategy should make an effort to make certain that resources and procedures are valuable, rare, inimitable, which the operation is organised to take advantage of them. Remember that every one of these things are time dependent. A capability could be valuable now, but competitors are 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 and also the former head of the company’s Operations Management Group. He provides for a consultant in several sectors, including Financial Services, Utilities, Retail, Services, General Services, Aerospace, FMCG, and Engineering Manufacturing.
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