Why Ignoring Your Operational Strategy Is Costing You
Companies are constantly juggling new possibilities and unexpected hurdles. With technology evolving at breakneck speed and customer preferences shifting, there's one thing that's undeniably true: you need a solid operational strategy to thrive.
Organizations that neglect this crucial aspect of their business plan may find themselves struggling to stay afloat. The latest research shows that operational strategy isn't just some fancy corporate jargon - it has a real, profound impact on business operations.
I'll explain why turning a blind eye to your operational strategy could be draining your resources and stunting your growth + what to do to not just survive, but succeed in a cutthroat market.
What Is Operational Strategy?
Operational strategy is essentially a blueprint that guides an organization on how to do business effectively. It aligns your day-to-day operations with the company's overall strategic goals.
Operational strategy outlines how a business will utilize its resources, processes, and people to deliver products or services efficiently and meet customer needs.
Every organization should have a unique operational strategy. It should be flexible enough to adapt to changing market conditions but remain true to the company's core mission and values.
What Is the Difference Between Business Strategy and Operational Strategy?
There is a difference between business strategy and operations management. They're closely related, but they have different purposes.
Strategy is the overarching plan that guides an organization's decisions and actions.
It involves:
Setting long-term goals and objectives
Determining the organization's position in the market
Identifying target customers and their needs
Deciding which products or services to offer
Allocating resources at a high level
Strategic decisions shape the future direction of the company. They might include entering new markets, developing new product lines, or changing the business model.
Operations, on the other hand, focus on the practical, day-to-day activities that keep the business running, such as:
Managing production processes
Coordinating supply chains
Delivering product or service to customers
Handling customer service
Implementing quality control measures
Basically, operational strategies execute your corporate strategy effectively and efficiently.
For example, if your company is expanding into a new market, operations strategy would handle the practical aspects of this expansion. This might include setting up new production facilities, establishing distribution networks, training staff to serve the new market, etc.
This is why an effective operations strategy is essential for any business that wants to actually achieve its big dreams - not just talk about them.
Why You Shouldn't Ignore Your Operational Strategy
Ignoring your operations strategies comes with unpleasant consequences. Here are some of them:
Inefficient resource allocation: Without a clear operational strategy, you may find yourself misallocating resources. This leads to waste and missed opportunities.
Lack of competitive advantage: A well-defined operational strategy can give you a significant edge over competitors who are operating without a clear plan.
Reduced agility: The ability to adapt quickly to changes is crucial for any business. A solid operational strategy helps you become more agile and responsive.
Inconsistent customer experience: Without a cohesive operational strategy, delivering a consistent and high-quality customer experience becomes much more challenging.
Difficulty in scaling: As your business grows, the lack of a clear operational strategy leads to inefficiencies and lost revenue.
In contrast, a functional operations strategy supports business success because you have a clear plan for how you're going to reach your goals.
Operational Strategy Statistics
The numbers paint a clear picture of the importance of operational strategy (and the challenges many organizations face in creating one).
According to Harvard Business Review, some 60–90% of strategic plans never fully launch. This staggering statistic highlights the gap between strategy formulation and execution.
48 percent of leaders spend less than one day per month discussing strategy. It's hardly a coincidence that 48 percent of all organizations fail to meet at least half of their strategic targets.
98% of leaders think strategy implementation takes more time than strategy formulation.
Look out for these 5 signs that your organization needs operations consulting.
Operational Strategy Examples
Amazon
Amazon's operational strategy puts the customer first.
They use data analytics to predict customer needs and combine that with efficient warehousing and delivery systems to build a loyal customer base and dominate the e-commerce market.
Toyota
Toyota's operational strategy is built on the principles of lean manufacturing.
They minimize waste and continuously improve processes across their global operations. This allowed the brand to achieve high levels of efficiency and innovate car manufacturing.
How to Create an Effective Operational Strategy
1. Align with Overall Business Strategy
Your operational strategy should be in sync with your overall business strategy. Start by reviewing your mission, vision, long-term goals, and company's business model.
Your operational strategy should enable you to reach these broader objectives.
2. Analyze Current Operations
Do a thorough analysis of your current operations. Identify strengths, weaknesses, inefficiencies, and bottlenecks. This analysis will give you valuable insights into areas that need improvement and help you prioritize your efforts.
Try doing SWOT analysis to help you do this.
3. Set Clear Objectives
It's important to set clear and measurable objectives for your operational strategy. Think about targets for efficiency improvements, cost reductions, quality enhancements, customer satisfaction metrics, and other important aspects.
4. Make an Action Plan
Create a detailed action plan to reach your goals. Outline specific initiatives, timelines, resource requirements, and responsibilities.
Your action plan should be realistic and achievable within your organization's constraints and competitive priorities. This is how you bridge the gap between good ideas and successful initiatives.
5. Implement and Monitor
When you put your plan into action, you also need to create a system for monitoring progress. Regularly look at key performance indicators (KPIs) and make adjustments to your business operations.
Operational strategy isn't something you do once and use forever. It's a continuous improvement process to build a dynamic organization.
The Importance of AI, Predictive Intelligence, and Embracing Change
Artificial Intelligence is here to stay (and revolutionize the way we run businesses). If you want to maintain a competitive advantage, you need to embrace technological advancements and, by extension, change.
AI and predictive intelligence are increasingly becoming integral parts of effective operational strategies.
AI can analyze large amounts of data to identify patterns and trends, which helps you forecast more accurately and make better decisions about your business strategies. You can use AI to optimize supply chains, predict maintenance needs, and even personalize customer experiences.
Predictive intelligence is also a great way to stay competitive because it allows you to anticipate future outcomes based on historical data and current trends.
Overall, organizations that can quickly adapt their operational strategies to new market conditions, technological innovations, and unexpected challenges are much more likely to succeed than organizations that stay stuck in the past.
Building a Culture of Continuous Improvement
Once you create an operational strategy, you'll need to continue refining it. To do that, you need to build a culture of continuous improvement.
This culture encourages all employees to constantly look for ways to improve processes, reduce waste, and increase efficiency.
Typically, organizations use regular training, open communication channels for sharing ideas, and a system for implementing and rewarding successful improvements to build a corporate culture that's always focused on moving forward and getting better.
Get Operational Strategy Consulting to Take Action Today and Build Lasting Success
The facts tell us that 67% of leaders believe their organization is good at crafting strategy, but only 47% believe their organization is good at implementing strategy. This raises some serious red flags. Without implementation, good ideas never turn into functional initiatives.
If you're struggling to create or execute your operational strategy, learn more about our Strategy Development, Process Development, and Risk Management capabilities.
