Most operations strategies fail. Why is that? Is it because they aren't correctly implemented? Or is it because they are built to fail from day one?
The answer: both.
Your people have their hands full. Without a clear roadmap for decision-making and competitive priorities, each team is like a ship without a rudder. People need a human-centric approach to long-term planning to maximize their chances of success.
You must create an operations strategy that considers the customer experience, the product lifecycle, and everything you have going on in-house, from your people to your resources to your operational capabilities.
In this guide, you'll learn:
- What an operations strategy is.
- How an operations strategy can bring your team together.
- Types of operating strategies.
- What a good operations strategy includes.
- How the essential elements of your strategy promote growth and evolution.
Okay, got your coffee topped up and ready? Let’s roll.
What is an operations strategy?
An operations strategy is a business plan that sets out the company's processes, initiatives, values, and goals to provide clear guidance and direction to help the teams achieve their objectives.
With a well-defined approach to operations management, the people in your company can maximize the available resources to gain a competitive advantage. This corporate strategy is critical for supply chain management, product management, and manufacturing strategy.
Think of an operations strategy like a blueprint that outlines how your team collaborates to do their most meaningful work. It is not just about how you make new products or manage your workflow—it is an intrinsic aspect of your overall business strategy that influences your competitive position and your ability to succeed.
Danny Ocean didn’t just storm into the Bellagio Casino in Ocean’s Eleven. The master thief had an operational strategy that tapped into every resource available. He had a clever rag-tag team of people who had experience on the job. Everyone brought something to the table. From the slick-talking sidekick to the ninja acrobat, everyone had a voice, and everyone’s input mattered.
📚Recommended reading: Strategic and Operational Planning: How they're related + Examples
What are the benefits of an operations strategy?
A well-thought-out operations strategy can positively impact your company in many ways. Here are several benefits:
- Provides clarity and context for team members: An operations strategy gives your people clarity and context about your business processes. When you make strategy available to everyone, you improve the employee experience. Everyone feels included, and you are united to work toward a shared vision (like robbing three casinos in one night).
- Aligns teams: Operational plans improve communication between departments in a business model that focuses on its people. They understand how their roles fit together as part of the larger cause.
- Empowers employees: With clear directions and goals, all stakeholders at all company levels can connect to your overall vision and execute with confidence on the business goals.
- Improves resource efficiency: With a clear description of what, why, and how your company hopes to operate, you will be more effective at organizing teams. This method is an efficient way to make sure people prioritize high-impact activities.
- Boosts team collaboration: Face it: Brad Pitt held the entire crew of Ocean’s Eleven together. You can go next-level when you have an operations strategy that encourages better communication and collaboration throughout your organization.
- Increases employee retention: As a sense of alignment brings the whole team together, everyone takes on more ownership and accountability. Everyone has a role in the company's bigger plan, which drives motivation, engagement, and success.
- Accelerates the ability to scale and enter new markets: When Airbnb was finding its feet in the U.S., a copycat business threatened to usurp its position in Europe. Airbnb responded with a massive hiring operation and rapid but carefully orchestrated advance to claim the market.
📚Recommended reading: Operational Plan: Everything You Need To Know (2023 Guide)
Types of operations strategies
There are several different types of operations strategies that organizations can use to achieve their goals and objectives. The five most common types of operations strategies are:
- Core competency strategies: This strategy involves focusing on and developing the unique capabilities and resources that give an organization a competitive advantage. Organizations that use this strategy typically focus on identifying and leveraging their core competencies to create a unique value proposition for customers.
- Corporate strategies: This strategy involves aligning the operations of an organization with the overall goals and objectives of the company. Organizations that use this strategy typically focus on integrating the operations function with the rest of the company to ensure that it supports the company's overall mission, vision, and strategy.
- Competitive strategies: This strategy involves positioning an organization to compete effectively in the marketplace. Organizations that use this strategy typically focus on identifying and responding to the competitive forces in their industry, such as price, quality, and service, in order to gain an advantage over their rivals.
- Product or service strategies: This strategy involves developing and delivering products or services that meet the needs of customers. Organizations that use this strategy typically focus on understanding customer needs and developing products or services that meet those needs in a way that differentiates them from their competitors.
- Customer-driven strategies: This strategy involves putting the needs of customers at the center of the organization's operations. Organizations that use this strategy typically focus on understanding and meeting the needs of their customers, and using that understanding to drive improvements in their operations.
There's no unique formula! You may choose to use a combination of these strategies depending on your goals, objectives, and market conditions. It's important to assess your current situation and decide which strategies will work best for your organization.
What are the key elements of a good operations strategy?
When the Avengers set out to reverse Thanos’ plan to eliminate virtually everyone in the universe, they had powerful short-term solutions (Hulk and Thor), quality management (Captain America), and arguably the most advanced real-time machine learning technology known to man (Cheers, Tony Stark). The point is, that the whole team had a vital role to play.
A successful strategic operations management is one that takes advantage of all the resources and tools available. As you expand access to technology across functions and embrace new value, you can drive the strategic agility you need to stay ahead of your competitors.
Let's look at five essential elements your operational strategy must cover:
It's a people-first method. When it comes to your operational strategy, it's important to make sure everyone in your company is on the same page. Without alignment, different departments and employees may have conflicting priorities or work towards different goals. This can lead to wasted resources and make it hard to achieve your desired outcome. If your people don't understand the connection to the mission and vision, they could swim against the tide.
An operations strategy evaluates the key strengths of your business and considers the resources at hand. A strategy map will help connect your operational priorities to the Key Performance Indicators (KPIs) and objectives. Your employees must see the cause-and-effect relationships between their actions and the big picture.
Your customers expect high standards, from the product to the user experience to the support and aftercare. When you have a radically human strategy that focuses on the needs of people—your employees and customers—you can deliver a better experience for them all.
Focused on competitive priorities
An operational strategy is crucial for you to stay ahead of the game and competitive in the market. By focusing on key priorities like cost, quality, speed, and flexibility, you can ensure that your company is producing goods and services at the lowest possible cost, meeting or exceeding customer expectations, responding quickly to customer needs and adapting to market changes.
The days of managing people and processes via spreadsheets are gone. Digital transformation helps you reimagine the future with a strategy that is easier to access, understand, and implement. Our strategy execution platform is an ideal tool for operations managers and teams that are looking to take their ideas to implementation.
We know it's cliché, but human resources are the most valuable resource. When you give your front-line employees a voice in your strategy, you can tap into their first-hand experience dealing with customers. This collaborative approach to operations strategy development will steer your strategic plans in the right direction and improve the ground-level execution.
What is an example of operations strategy?
Imagine that you are the operations manager of an apparel manufacturing business and you want to maximize profitability by increasing efficiency and reducing costs. To achieve this, you create an operational strategy that focuses on cost reduction, quality control, speed, and flexibility. To do this, you align your operations plan to your overarching company strategy and divide it into key focus areas, define objectives and related projects, and measure performance using key performance indicators (KPIs).
For example, in the cost reduction focus area, you may set an objective to reduce raw material costs by 10% within the next 6 months and launch projects such as negotiating better prices with suppliers, optimizing your supply chain and implementing an inventory management system. To measure performance, you may track KPIs such as supplier cost per unit and inventory turnover.
Similarly, in the quality control focus area, you may set an objective to improve product quality by 15% within the next 6 months and launch projects such as investing in new technology, implementing efficient systems and implementing a quality control program. To measure performance, you may track KPIs such as product defect rate and customer satisfaction.
By implementing this operational strategy and dividing it into key focus areas, defining objectives and related projects, and measuring performance using KPIs, your business is able to produce more efficiently, reducing costs and improving quality control, which will help you achieve your business goals and objectives, and align with the overall corporate strategy.
Key success factors for operations strategies
There is a pattern to success in operations strategies. These four aspects help to ensure buy-in and evolution in a company.
When you create your operations strategy, team alignment across your overall mission and strategy map increases the chances of success. Individual goals, team goals, and project benchmarking interlink as everyone pulls in the same direction.
An operational strategy that doesn't involve its employees early on won't last too long. A top-down approach where the C-suite dictates strategies from their high horses outside the boardroom is no way to win the hearts and minds of your organization.
An omnidirectional model is a more effective approach because you make people feel like they matter. And guess what? They do matter! You're only as good as your team. When you work closely with employees on strategy development and consider their opinions, satisfaction, and individual ambitions, you'll have a much better outcome.
A good operations strategy fosters a culture that constantly looks for new ways to improve. When you embrace innovative new practices, you drive business evolution, as your company will remain fast and flexible, ready to adapt to changes in the market.
You can use new tools and automation practices to help improve aspects of your business, connect employees, and operate with greater efficiency in all areas. When growth and innovation underpin your operations strategy, explosive growth is sure to happen.
Data shows you where your strategy works and where it doesn't. You can use data to discover opportunities to add value and embrace change. You can analyze success metrics and make changes according to the feedback, making more accurate forecasting and smarter operations decisions. WIth data-driven iterative strategies, you can begin to dream bigger and execute better.
Start executing your operations strategy
High-level operations strategies are the foundation for effective business practices at the ground level. Whether you plan to rob a casino, conquer the world, or improve your product development and manufacturing functions, a well-built operations strategy is a critical tool that can drive game-changing innovation and success.
It is the one source of truth your team needs to close the gap between planning and execution.
Once set, your entire company can focus on what matters. It is the ideal way to empower your people and help them take the leap to make your vision happen.
We can help you disrupt the way you do strategy to evolve your approach at every stage. Check out our Operational Plan Template to get started.
Frequently asked questions about operational strategies
Why is an operational strategy important?
An operational strategy is important because it helps a company align its resources and activities with its overall business strategy. It also helps a company stay competitive by identifying opportunities for improvement and cost savings, and by ensuring that the company is able to respond quickly to changes in the market. It is also an important aspect of strategic operations management, which helps in creating a plan to achieve the company's goals and objectives.
What are the 4 competitive priorities in an operations strategy?
The four competitive priorities in an operational strategy are cost, quality, speed, and flexibility.
- Cost competitiveness refers to the ability to produce goods and services at a lower cost than competitors.
- Quality competitiveness refers to the ability to produce goods and services that meet or exceed customer expectations.
- Speed competitiveness refers to the ability to quickly respond to customer needs and get products to market faster than competitors.
- Flexibility competitiveness refers to the ability to quickly adapt to changes in customer demands or market conditions.
Achieving a balance among these priorities is important as it allows a company to meet the needs of customers and stay competitive in the market. This means that, a company should aim to produce goods and services at the lowest possible cost while maintaining a high level of quality, respond quickly to customers' needs and adapt to market changes.
How does an operational strategy relate to a company's overall business strategy?
An operational strategy is a component of a company's overall business strategy. It outlines how the company will use its resources to achieve its goals and objectives. The operational strategy should support and align with the company's overall business strategy by addressing how the company will produce and deliver goods and services to customers. It is also a key aspect of corporate strategy and supply chain management.
How do you measure the success of an operational strategy?
Measuring the success of operational strategies can be done by monitoring key performance indicators (KPIs) such as cost, quality, speed, and flexibility. Additionally, companies can track other metrics such as production capacity, inventory turnover, and customer satisfaction to evaluate the effectiveness of their operational strategy. It's important to regularly review and adjust the operational strategy based on the performance data. An operations manager can also use SWOT analysis to evaluate the company's strengths and weaknesses, opportunities and threats to ensure the success of the strategy.