In my forthcoming book, Moving Into the Express Lane: How To Rapidly Increase the Value of Your Company, I explore how to align your operations strategy with the business vision. I refer to this as a holistic view that balances the why and the how.
The vision tells where you want to be in the next two to three years. It represents the external force of the company, focused on the market. It is generally only good for two to three years, so it shouldn’t take six months to develop your vision.
Together, the business strategy and vision define what the organization will be. They set the scope and framework within which executives and management make decisions that impact the company’s nature and direction.
The business vision and strategy need to have innovation as a keystone. Innovation can come in one of two forms:
- Transformative innovation
- Transubstantiation innovation
Transformative innovation takes what you have now and makes it better. It is creative improvement. Product redesigns and extensions and Lean initiatives do this. Transubstantiation innovation is the proverbial right turn that creates something totally new, that is, it changes the substance of the company. Ford was a transubstantiation company. So was Apple.
Some strategy developers use the theory of the driving force, which is the central concept that guides the strategy. Examples of driving forces include:
- Products or services offered
- Markets served
- Method of sale
- Method of distribution
- Production capability
There is usually one that is the key driver of the organization and helps set the operations strategy. Operations strategy is the how of the business. How do we achieve the business strategy and vision? What production methods, distribution network, or supply chain strategy do we need? Operations strategy is the engine that gets you there.
In the case of Operations the drivers could be:
- Low cost
- High quality
Each company creates a unique definition of their particular drivers. For instance, Lexus defines quality as fit and finish. Remember the ad where they roll a ball bearing down the seam between the hood and the quarter panel? BMW defines quality as a driving experience.
In Rick’s Reciprocity Principle, the operations strategy pushes the business while the business strategy pulls it; they work together to move the business toward the vision like a train that has engines at both the front and back. By having pushers as well as pullers, the train becomes more efficient as the pushing engines take the pressure off of the couplings between the cars, which takes pressure off of the wheels, allowing the train to use less fuel and put less wear on the wheels and other parts.
The business strategy comes first, followed by the operations strategy, and alignment between the two is critical to move the business toward the vision. When Wal-Mart was first started, their business strategy was to enter small town markets with low cost merchandise. The operations strategy included creating a distribution network that could acquire very low cost goods and deliver them to the stores just in time. The Wal-Mart distribution system became a model for the industry.
Can you explain your business and operations strategy in a few sentences? Does your management team understand it? Is your two to three year vision clear? If the business strategy is the outer force of the business, the operations strategy is the inner force. Are your forces aligned?
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