Operations Strategy:Threading the Vision to the Customer

Dr. Philip E. Burian, CM

- Presented to the University Industry Advisory Board (2010) – over 40 organizations represented- Presented at the July 2011 American Society for Training and Development (ASTD) Meeting in Sioux Falls- Presented to the Briar Cliff University Business Faculty (2011) in Sioux City- Presented to the CxO Technology Symposium in Sioux Falls (2012)- Journal Article and Conference Presentation under development for The Clute Institute of Academic Research (2013)

The grand aim of all science is to cover the greatest number of empirical facts by logical deduction from the smallest number of hypotheses or axioms. – Albert Einstein

The Process View Can Be A Little Confusing

TransformationBusiness Process Reengineering

Process Improvement DSDM

Malcolm Baldrige

InterventionQuality Process Improvement

CMMi

ISO 9000

So many choices to increase efficiency, improve operations, and bolster shareholder value. Most are descriptive and not

prescriptive.

I have not failed. I've just found 10,000 ways that won't work. -- Thomas Edison 

PMI6-Sigma

JIT

SCM

1) Have a Vision (not the same as mission although the two are often confused)2) Focus Efforts3) Have a Short-Term and Long-Term Plan4) Establish Your Brand to Match Your Products5) Invest in Value-Added Products and Services6) Know Your Strengths and Weaknesses7) Know your Core Competencies8) Know and Monitor Your Competitors9) Create a Culture of Innovation and Creativity and Invest in it10) Build and Maintain Solid Business Processes and Practices and Eliminate Inefficiencies11) Choose the Right Management Team, Eliminate Antiquated Management Practices and Remove Bureaucracy12) Establish a Continuous Environment of Improvement for Strategy, Organization and Culture13) Learn from Other Companies Successes and Failures14) Target Markets and Customers Carefully15) Measure What Needs to be Managed16) Partner with Organizations that can Deliver Customers17) Execute, Execute, Execute

Business Leader View

Business Week'sStrategy Power Plays (2006)

The following is a derived list of key business imperatives from industry leaders

Basic research is what I'm doing when I don't know what I'm doing -- Wernher Von Braun

Research Approach

A Participatory Action Research model was used because of the operational complexity of the problem, need for colleague collaboration, and for industry

leader participation

(Kolb, 1984)

Original Problem Identification

Collaboration &Interaction

WorkshopDevelopment

• Shared Vision (Senge)• Core Assets/Values (Senge & De Bono)• Visions and Visioning (Yukl)• Team Learning (Senge)• Personal Mastery (Senge & De Bono)• Self-Organizing (De Bono & Whyte)• Systems Thinking (Senge)• Focused Organizations and Management (Mintzberg)• Competitive Advantage (Porter, Senge)• Stewardship (Block)• Productivity (Zukav)• Sustainability (Laszlo and Zhexembayeva)• Economics (Ip)• Steve Jobs (Jobs)

Inspiration

Economists come in two flavors - mathematicians that wanted to be economists and economists that did poorly in math. – Phil Burian

Operations Strategy

Operations Strategy is the integration and optimization of operational functions and processes with market and

customer requirements

Operations Strategy Framework

Creates a thread from the Vision to the Customer

Captures the “as-built” state of the organization

Facilitates identifying the gaps and inconsistencies throughout the organization

Provides a tool that can feed strategic planning and optimize operations

[O]ld beliefs die hard even when demonstrably false. -- Edward O. Wilson

Products & Services

New Existing Modified

R&D Technology People/Skills Facilities Organization Processes

Real Capabilities

Systems HR Financial Legal Procurement Inventory Quality Vendor

Support Functions

Performance& Metrics

CostsFlexibility

SpeedQuality

Operations Strategy Framework

Strategic Information

CompetitiveAnalysis

Customer Requirements

Market Discriminators

The Operations Strategy Framework can be used as an effective decision-making tool that assists in determining the integration and connectivity throughout the entire organization

Vision, Objectives & Strategies

Enterprise Core

(Burian, 2008)

Business Direction

• A clear vision, objectives and strategies serve as the foundation and blueprint for the entire organization

• A vision is not a mission statement and it does have an end-point, it’s a vision…

• Objectives are the goals the organization wants to achieve

• Strategies are how the organization will achieve those goals. These may need to change as markets and customers needs change

• All of the strategic information, products and services, real capabilities and

support functions should be aligned to support the vision, objectives and strategies of the organization

• Clear business direction must be cascaded down throughout the entire

organization in order for people, process and technology to be aligned

Support Functions

• Technology, human resources, legal, procurement, quality and vendor products and services are leveraged to support the real capabilities of the organization

• Real capabilities must be optimized to support the effective and efficient delivery of products and services

• Supply-chain systems are a vital component of the support function that must be aligned to the operation strategy objectives and vision

• Human Resources (people) must understand and support the organization’s vision, objectives, and strategy – communication becomes the key

• Many inefficient and ineffective operations can be hidden in these functional areas and as a result increase overall costs and directly impact the delivery of products and services

• Facilities, people, technology, organization, and even core processes are used to support the delivery of products and services

• Real capabilities are the true production and delivery assets and tools of the organization

• Having the correct balance of resources and people with proper training and skills that leverage technology are extremely important to sustain the organization

• The use of performance and metrics are critical in order to determine both economies of scale and scope

Real Capabilities

• Offerings are the products and services an organization markets to customers and consumers

• Based on strategic information and analysis, an organization must assess whether a new, existing, or modified product or service will fill the need of the customer

• Products and services need to be targeted and sometimes tailored to meet customer needs • They can also be bundled or unbundled to provide greater or enhanced value to the market

• New products should be strategically planned and forecasted only when existing products and services cannot adequately fill requirements in the market

• A longer range planning cycle should be considered when developing new products and services to allow greater development, testing, and introduction time before the product or service is ready to market

Product Offerings

• Performing a thorough competitive analysis and analyzing customer requirements can provide the market discriminators an organization needs to be competitive

• This competitive analysis must be reviewed and updated on a consistent basis in order to observe changes in a competitor’s behavior, actions and product offerings

• Customers should be even more frequently sampled to determine changes in needs

and purchasing trends

• Performance and metrics should be applied to all strategic information that is gathered. This will help an organization compare itself to its competitors

Strategic Information

Discriminators

• There are a number of key items that separate or distinguish an organization from its competitors

• Cost, flexibility, quality, and speed are the minimum criteria that determine/drive competitive advantage

• Discriminators must be carefully analyzed to determine how an

organization’s competition will respond to market and customer reaction and stimulus

• Analysis of strategic information is a continuous process and not a one-time event

• The information must be inserted back into the framework and assessed

• Performance and metrics should be used to include costs, flexibility, speed, quality to measure organizational effectiveness both internally and externally

• These metrics can help compare the organization against strategic information about competitors, customer expectations, and how the products and services compare to similar ones in the market

• Internal metrics can also determine how effective and efficient an organization’s real

capabilities and support functions are performing with respect to the market and the product and service it is delivering

• More importantly, the proper use of metrics can highlight imbalances and unproductive

operations and processes throughout the organization

Performance & Metrics

Summary

• Broadens the traditional view of an organization to include vision, objectives, strategies; people, process, technology; and performance, innovation and productivity

• Provides an approach that can be used to “thread” the organization

• Captures the “as-built” state to help determine the gaps and inconsistencies throughout the organization

• Provides a very strategic/top-level operational view of the entire organization and

also serve as a strategic planning tool

If we knew what we were doing, it wouldn't be called research, would it? -- Albert Einstein