The How and the Why of Operations Strategy

Many companies focus on the tactics of continuous improvement and are often disappointed with their lackluster results. They look at top line growth and see anemic improvement, and instead of bottom line profitability they see little or no growth. Because company value is often based on top line and bottom line growth as well as cash flow, a steep positive improvement curve helps rapidly increase your business’s value.

But isn’t it best to just move ahead with improvement efforts to get the quickest bang for your buck? Not if you really want exponential improvement. The problem with tactics is they focus on the how of improvement efforts without the context of why.

Why is powerful. Why:

  • Informs your employees of the purpose of their efforts and ultimately what’s in it for them.
  • Puts things in context so priorities are easy to set and decisions are easier.
  • Helps focus on what’s important to be sure your improvement efforts are targeted correctly.

Why is strategy, how is tactics. Putting tactics first is putting the cart before the horse. Do you have a strong operations strategy that aligns with your business model and vision? Are you achieving breakthrough results in your business?

© 2019 – Rick Pay – All Rights Reserved

New Book: Moving Into the Express Lane

I’m pleased to announced that my new book is available on Amazon.

Moving into the Express Lane: How to Rapidly Increase the Value of Your Business, will show readers how to exponentially increase their company’s value by aligning operations strategy with the business model. Increasing a business’s value and potential sale price is important for business transitions as well as for ongoing operations to accelerate revenue growth, increase profits and cash flow, and to allow the company to increase capacity and grow without capital expense. Many companies focus on implementing tactics, such as lean, without a strategic framework, which renders their efforts fruitless. By taking a holistic operations-based view of strategy and tactics, executives can exponentially improve their company’s value.

© 2018 Rick Pay, all rights reserved.

Reciprocity Between Strategy and Tactics

A holistic view of strategy creates a balance between the business strategy and the operations strategy. An integrated approach that addresses both simultaneously exploits core competencies, which can help the company achieve its vision. Many companies do the corporate strategy first, then the operations strategy. But by doing them in an integrated fashion, both can contribute to each other.

The business strategy pulls the business ahead while the operations strategy synergistically pushes it. I call this Rick’s Reciprocity Principle, and it functions like a freight train with engines in front that pull and additional engines in back that push. When they are well balanced and working together, this makes the train more efficient by reducing the pressure on the couplings between the cars and on the wheels’ interface with the track. The result is less wear, greater fuel efficiency and a better-running train. Business strategy and operations strategy work together in much the same way.

 

© 2017 Rick Pay – All rights reserved.

This post is an excerpt from my forthcoming book, Moving Into the Express Lanes, published by Business Expert Press.

The How and the Why of Operations Strategy

Many companies focus on the tactics of continuous improvement and are often disappointed with their lackluster results. They look at top line growth and see anemic improvement, and instead of bottom line profitability they see little or no growth. Because company value is often based on top line and bottom line growth as well as cash flow, a steep positive improvement curve helps rapidly increase your business’s value.

But isn’t it best to just move ahead with improvement efforts to get the quickest bang for your buck? Not if you really want exponential improvement. The problem with tactics is they focus on the how of improvement efforts without the context of why.

Why is powerful. Why:

  • Informs your employees of the purpose of their efforts and ultimately what’s in it for them.
  • Puts things in context so priorities are easy to set and decisions are easier.
  • Helps focus on what’s important to be sure your improvement efforts are targeted correctly.

Why is strategy, how is tactics. Putting tactics first is putting the cart before the horse. Do you have a strong operations strategy that aligns with your business model and vision? Are you achieving breakthrough results in your business?

© 2017 – Rick Pay – All Rights Reserved

Operations Strategy – What Are Your Options?

At this time of year, many companies conduct the annual off site planning retreat to develop strategic plans for the next year. Then it’s back to work and the plan sits on the shelf until next year’s retreat. Strategy represents the means selected to achieve the vision, which sets the goals you are trying to achieve over a short period of time, usually two to three years. Strategic planning is actually an oxymoron, since strategy and planning are on different levels. Planning involves the tactics used to implement the strategy.

 

Operations strategy involves the specific operations and supply chain means that the company will use to help achieve the vision. There are five different strategies that could be selected, and you get to pick no more than two:

  • Low cost
  • High Quality
  • Speed/flexibility/responsiveness
  • Wide line/custom
  • Innovation

For example, part of what drove the offshoring trend in the 1980s and 1990s was the strategy of low cost. Then speed started the reshoring process. Tesla has a strategy of innovation, while Lexus is quality.

What is your company’s operations strategy? Do you have a clear vision that you want to support? Establishing a vision and then picking your strategy before you start the tactical activities allows you to prepare for the future and dramatically increase the value of your company.

 

© 2016 – Rick Pay – All Rights Reserved