Jason Piatt, president, Praestar Technology Corp.
It seems that no time is convenient to pause the action and review strategy. When you’re in the thick of the battle to produce a product on time, under budget, with superior quality, a strategic review may seem like a waste of time or a misuse of resources. That said, failure to review strategy may result in getting to the wrong destination while doing so very efficiently.
By asking five basic questions and considering the answers, you might optimize business performance and not just operations performance.
1. Does your operations strategy complement or conflict with the business strategy?
All too often, optimized operations performance (yielding highest output at lowest cost and lowest scrap output) is the target that is sought by operations managers. This creates an efficient operation but an inefficient business. Operations executives must consider the marketing and sales strategies of the business as well as new product or process development efforts that are being undertaken by the business. This is incredibly important to establish effective processes for new product onboarding as well as identifying necessary tradeoffs for degree of variation from build to build. The tradeoffs that will be made for high mix of product manufacturing will be significantly different from those environments that are high-volume, low-mix production.
2. Have you adequately quantitatively assessed risk in your operations strategy and developed plans to reduce risks?
When you’ve established a business-complementary operations strategy, you should then consider which aspects of the strategy carry with them the most risk. This can be done similarly to an FMEA or other risk measurement and mitigation tool. Are there aspects of the strategy that, if they were to fail, would completely compromise your strategic outcomes? Are there aspects that may not cause complete failure, but will impact the outcome and are likely to fail? If either question has an answer of yes, then mitigation strategies for those risky elements should be developed immediately. They may result in the need for increased capital investment or further development of staff through training. In some cases, the elements should be rethought and adjusted to reduce risk while avoiding compromise of outcome.
3. Have you established specific, measureable goals for the operational team as well as key individuals and tied them to business outcomes?
It isn’t enough to have departmental outcomes measured. It’s often argued that this is sufficient, since everyone is then accountable to the same outcomes. While that’s positive, it is insufficient. Individuals ultimately work toward objectives that positively affect them -- or when a negative outcome will affect them negatively as individuals, not departments. Negative departmental outcomes only have impact when those departmental failures also will impact the individuals directly. For successful operations strategy implementation, group and individual accountability is critical. Similarly, group and organizational alignment is also critical.
4. Does the operations strategy accommodate necessary business timelines?
A strategy with strategic objectives that doesn’t incorporate a timeline for achievement will float. In order to achieve appropriate business results, the timeline should not only be fixed but accommodate the needs of the business and integrate with other business functions. Has the strategy been adapted to account for likely market opportunities and product development timelines? Will a missed process development milestone compromise the operations strategy? If so, a reconsideration of operations strategy risk might be in order.
5. Does your operations strategy maintain flexibility while increasing accountability?
Changing market and product- or process-development strategies calls for a necessary flexibility in the operations strategy. That said, accountability needs to be maximized in order to ensure success. In order to be completely successful, a good pairing of responsibility and authority must be present. In other words, those who have responsibility to accomplish the key elements of the operations strategy should have matching levels of authority. This includes an ability to line-manage staff as well as budgetary control and access to senior management when needed.
Asking five short questions to gain (or regain) perspective on your operations strategy, especially as it relates to the market, isn’t only beneficial, it is essential to aligning strategy, tactics, and customer-focused outcomes.
Jason Piatt is president of Praestar Technology Corp., a provider of consulting and training services to manufacturers in the Mid-Atlantic region specializing in lean, Six Sigma & strategy formation.