When people hear the term operations as a business function, they typically think of the day-to-day workings of a business; strategy is usually not the first thought that pops into their heads. Most definitions of business operations sound something like, "the process of creating value for clients out of the resources of the business." While this may sound like a tactical day-to-day activity, operations also plays a critical role in developing and executing the strategy of a firm.
In general terms, strategy is the link between a firm (its values and vision, capabilities, resources, and structure) and the industry it competes in (its clients, competitors, and partners). In order to create a unique and sustainable position, the firm must implement a tailored, unique set of systems and activities to support a position that is not easily copied - this is where the roll of operations is crucial. Being unique, not better, is the key to strategy. Strategy is not about doing the same things as your competitors, it is about doing them better. Striving for excellence in execution, while very much a responsibility of operations, is merely the price of admission.
Operations is largely responsible, strategically, for the creation of that tailored set of systems and activities to support the unique value a firm provides to its clients. Operations has to design and tailor the firm's balance of responsiveness and efficiency, capacity of resources, quality standards, and internal processes to deliver a firm's promise to its stakeholders. Operations also needs to work closely with the other business functions of the firm to help implement processes that nurture the culture to support and strengthen the firm's value proposition. Culture is not easily mimicked and can therefore be a cornerstone of strategy.
The best way to illustrate how operations can support strategy is by example. Our company has identified a value proposition that hinges on defined core strengths. We have a matrix organizational structure with dedicated directors and project managers aligned with the markets we serve. This allows for decentralized decision-making, structured with our ISO 9001:2008 quality management system, so we can be responsive with limited notice. We have specialized facilities and staff to allow us to work on mission-critical projects. Finally, our culture magnifies our core strengths strengthening our unique value proposition.
While operations may be responsible for excellence in execution, it is also largely responsible for tailoring the processes and structure to support the unique positioning of the firm. That is the essence of strategy.
