High performance and clarity of operations strategy
High performance and clarity of operations strategy are a common pairing because it is operational processes and functions that deliver to customers.
The 18th century thinker politician Thomas Walpole famously commented that, “When people will not weed their own minds, they are apt to be overrun by nettles.” The same is true of organisations.
When we are not clear on how we intend to achieve our organisational aspirations, then it is likely that the weeds of confusion will choke us. This is most clearly apparent in the operational areas of an organisation: those elements that actually deliver a product or service to customers.
So, just how do we get clarity on operations strategy? The answer can be found in 2 clear themes:
- We need to have a real enterprise strategy. At its simplest levels, an enterprise strategy answers two questions: Where to play? How to win? We need to choose our markets and our means of attracting and retaining customers. The ‘how to win’ question is typically answered through differentiation, cost or responsiveness strategies. These questions must be addressed before we can start on an operations strategy, for without clear direction for the enterprise it’s hard to be clear in operations.
- We need to understand the organisational elements to be aligned, or else different parts of our operation will head in different directions. For the purposes of this article, I will be concentrating on this second element.
Fundamentally speaking organisational elements are the processes; the sourcing approach; the infrastructure; and, most critically, the people. However, processes come first because the purpose of operations is to deliver a service or product to customers, which requires the right processes. If we don’t understand the processes we want, then it’s hard to choose suppliers, build infrastructure, or select people that consistently deliver. The highest level of a process is a value stream. We need to know our value streams as they are today, what we want them to look like in the future, and the gaps we need to fill.
Measure current processes
Unavoidably, value stream clarity means we need to have competencies in measurement. Simply put, without measurement we are flying blind, and few operational leaders really enjoy that experience. This means that the first step after mapping your current processes is to measure them. This is often the starting point for a genuinely advanced operation. The measures must address effectiveness (or the extent we are meeting customer needs to a defined level of quality), efficiency (how much it is costing us to do so) and sustainability (the extent to which we are burning out our people or infrastructure). No assessment of today is complete without at least a point-in-time assessment of performance: later we will want to try to make that continuous and in real-time.
Well, if we know our current processes and our quantified performance, we can now be clear on what our future processes will look like, and targets for how they will perform. The next step is to decide the “core”: what we will do ourselves as opposed to outsource. In these decisions we are firstly assessing what we can do better than anyone else at a given level of cost, or what gives us a unique competitive advantage.
When we know what our future processes look like, what our measurable targets are, and which pieces we will do ourselves (as opposed to outsource), then we have real clarity of operations strategy. Now we have a platform on which to make decisions about people and systems because we understand what we want to do, and which pieces we will be delivering ourselves. At this point, and only at this point, can we feel confident about avoiding Walpole’s stinging nettles of confusion.
See the original article published in CEO Magazine here.
Roger Perry is the Managing Director of the Bevington Group, and one of the region’s foremost productivity improvement and organisational design experts. He has been an Assignment Director and Steering Committee member on over 40 transformation programs.