The missing link between Strategy and Operations

There are many organizations with very impressive strategy and efficient operations management, yet not performing to the expectations of stakeholders. Top management reviews its strategy and re-confirms the same and Operations team reviews its KPIs minutely and finds nothing wrong. The GAP still persists and the organizations’ struggles to continue.

Wonder Why? Is it the VUCA effect or the Dynamism of the external environment or is it lack of Response from the organization?

The answers are not easy to find, but here is one of the perspective.

While it’s easy to define an organization in 2 Dimensions of Strategy and Operations, there exists a THIRD dimension, this third dimension is the link between Strategy and Operations and it’s also a link that brings the DREAMS / GOALS set in the strategic management come true via effective implementation of Operations Management.

 This Third Dimension is known by many names, Continuous Improvement Management and Operations Excellence are the most common names.

Organization is like a FLUID body consisting of 3 concentric circles as shown in the picture below. Each of the circles has ability to contract and expand, in turn creating the pressure on its immediate next circle. So, if the strategy has to change and contract, it creates pressure on the middle circle, which in turn creates pressure on the operations management. You can call this as an alignment of forces.

Now imagine if the Improvement Management circle didn’t exist and Strategy has to change and expand, what will happen? It will expand creating a vacuum or disconnect between Strategy and Operations. How does this vacuum gets filled in? How does the external forces acting on the organization get effectively transmitted to the operations management? This is typically a situation when opportunities exist but the execution is lagging behind and organization is not able to grow.

One can also imagine the situations other way... if Strategy was to change and contract and if the Operations Excellence circle didn’t exist, how will it impact the Operations management?  This is a typical case of “Difficult economy” and one finds that the organization is struggling with “Cost” issues. Operations do represent “Cost” and the circle becomes bigger than the “Strategy” or “Revenue”.

Existence of an Operations Excellence circle combined with the concept of Fluidity or Agility of the organization is the crux of the situation.

Why the Organizations don’t have the Improvement Management Program as part of the structure?

For a long period of time, all the organizations operated at 2 levels and faced a difficult challenge of integrating strategy and operations. Few of the organization continue to operate the same way even today.

One of the reasons is the “Organization Structure”. While organizations are growing, the focus is on the “growth of top-line” or on the fear of “not losing the opportunities”. This is a common cause in growing organizations, where the top line growth is given paramount importance. Organizations focus on development of “Capacity” and at times miss on development of “Capabilities”.

Another common reason, it was long believed that “Strategist” is a different breed than “Operation team” and no inter-disciplinary movement between these two was possible. “Strategist” always aimed at the “Corner Office” and came from the “Ivory Tower”, whereas “Operations” was confined to day to day affairs.

What are the Common Symptoms and How do you know it’s time to reflect?

The “Cost Growth” starts leading the “Revenue growth”. Performance measures like Quality and Delivery start getting affected adversely, inordinate delays in resolutions of problems, recurrence of problems at regular intervals, increase in working capitals, frequent material shortages and customer un-happiness starts increasing.

Industry growth is higher than the organization growth, market share is shrinking.

Don’t just Run… Take Strides… and Breathe as well…

Growth brings along its own issues and if not managed well, an organization can get into a vicious circle. Every growing economy brings such matters to the fore, few organizations survive and many becomes part of the history, largely because of absence of the cushioning effect that Operations Excellence brings along with it.

Japanese philosophy didn’t believe in two-dimension theory, didn’t believe in “Strategist” Vs “Operations”. Japanese philosophy brought in the concept of fluidity in the organizations. It taught organizations to be flexible and responsive to the customers’ needs. “TAKT Time” is the best example. It gets calculated based on the customer demand and the whole organization has to work to it and not be constrained by the infrastructure, the machine time, or the labour productivity.

Which Organizations should focus on Continuous Improvement Program?

Continuous Improvement Management is the essence of Japanese philosophy, Operations Excellence is a more glamorous name of the same. Independent of the name, the concepts that it brings with it are useful for every organization irrespective of its status in the life cycle.

For an organization in its early years, it lays the strong foundation for performance management and developing the agility to grow and expand profitably. The organization which has passed the initial stage and growing rapidly tends to have Achilles hill, the improvement management provides it with an opportunity to overcome these problems systematically before these problems becomes a systemic problem.  For an organization which is in the maturity stage, it definitely provides enormous opportunities. It helps the organization to reinvent the vigour, extend the maturity stage.

One of the important learning of my experience of last 30 years is that it’s vital for an organization to have a strong “Improvement Management”, for implementing strategy successfully. It’s a crucial link between an efficient Operations management which operates for “Today” and “Strategic Management” which operates for “Days after Tomorrow”. “Learning and Development” a key element of Improvement Management keeps every organization in its learning mode.

I did mention in my previous article that china is picking up on Operations Excellence at a rapid speed, and closer to home in India, many industries which stayed away from it earlier, like Pharma Industry, are catching up now. In the Indian context, when organizations are struggling for growth in Top line and stress on Bottom Line, the importance of Continuous Improvement management can’t be emphasized enough. The focus will move on to “Sharpening the skills” at all levels. The opportunities arising from the global factors will demand Indian organizations to strengthen CONTINUOUS IMPROVEMENT MANAGEMENT at a faster speed to meet its strategic goals. It offers a gateway to Business transformation and cost optimization along with the most intangible and everlasting benefit of “Enriched class of people”