Monday 27th Jul 2020
Creating an operations strategy
Strategy is one of the most overused words in any business planning session. But a robust operations strategy should ensure your business is able to operate, and succeed, in any commercial situation. In short, an operations strategy explains the who, what, when, and how of a business’s operations on a day-to-day basis. It supports your overall company goals and keeps you focused on SMART objectives and targets that are realistic.
Part 5 of 7 in the Smart Business Planning Series
What is an operations strategy?
For your team, a clear operations strategy is one of the most practical tools in helping them stay aligned with your business’s goals. When a business has a strong operations strategy in place, it’s easier to introduce new products and services and respond to market demands, gauging the impact of those changes on employees and resources. An operations strategy needs to:
Define how products are created (or service is delivered) at low cost – aligning with SMART objectives
Specify how products are made to a standard specification
Describe how service is delivered to a known level of quality and without error
Define how actions are taken in response to market demands
Define how products and services should be delivered to meet customers expectations (matching a quotation or brochure description, for example)
Specify how the business should incorporate flexibility in its day-to-day activities – changing volume or speed of production, or the mix of products or services delivered
Why do you need an operations strategy?
What happens in the day-to-day has a direct impact on the potential for a business to achieve profitability. Most companies, therefore, benefit from having an operations strategy to outline an ideal, practical course of events over a three to five year period.
Your operations strategy should describe the human, physical and financial resources involved in running your company – and set out clearly how those resources should be allocated to achieve business goals that support SMART objectives. It should answer questions like:
anges on employees and resources. An operations strategy needs to:
How will you allocate resources - physical and human?
Who should be working on what, when, and how?
What risks do you face - and how can you mitigate them?
As long as it reflects the practical decision-making that’s necessary in your business, as closely as possible, a strong operations strategy can lead to greater consistency too – which in turn delivers cost-efficiencies back into your business.
Creating an operations strategy
When it comes to creating a practical operations strategy, there’s one golden rule – simple is best. Start by breaking objectives down into timeframes that seem tangible for your business’s line of work. Articulate your overarching aims – your mission, your vision, what you’re setting out to achieve as a business. Then think about the primary activities that could help you achieve those goals. They might be:
Production of a specific product
Delivery of a particular service
Use of a specific quality control
A unique method of delivery
A particular way of working
There are other criteria of course. Whichever criteria feel appropriate, make sure you can define them in detail and choose an accurate measure of their performance. These measures should become the key performance indicators (or KPIs) for your business to evidence and calculate success and failure over time.
An operations strategy doesn’t need to include details about individual projects. Rather, it defines the structure of your organisation, how different parts of your company operate on a daily basis – how they relate to each other – and what the steps are that should enable you to achieve specific (SMART) goals. When you have an operations strategy formalised, then you’re ready to develop individual project plans. A strong operations strategy gives you the confidence to tackle those projects effectively.
Choosing KPIsThe right KPIs are essential. Try to see them as the backbone of your operations strategy – clear signposts, showing whether or not your operations strategy is working. Leading indicators are more useful than reflective indicators: a leading KPI is something that contributes to creating a revenue stream (such as number of units being manufactured or the quantity of high quality sales calls being made). A reflective indicator measures the outcomes – units sold and conversions registered, for example.
Challenge your own operations strategy
In a smaller business, you may find it rewarding to let employees challenge your operations strategy in a moderated, open forum. A good operations strategy should reflect your business’s SMART objectives closely. It should also be something you revisit, on a regular basis, to consider the impact of market influences, customer expectations, trends in buying behaviours, availability of raw materials, and the efficiency of your supply chain.
Share your operations strategy with as many people as possible in your business – it should be a very accessible document, motivating staff and helping them to understand what they’re doing and why. Ask for feedback on the KPIs you’ve chosen, get your employees to feed back their view on whether or not, over time, they are realistic. If not, why not? If so, could they be extended? Explain the catalysts for choosing those metrics, why they matter so much to your business, and how they could help your team to pull together and achieve common goals.
Communicate your operations strategy widely
The importance of getting buy-in to an operations strategy cannot be overstated. When your employees have a reference document that gives them confidence, they feel empowered to act on their own initiative – within well-defined parameters of course.
Encourage your team to share their views on your operations strategy, and provide information on how their work affects or might be affected by any changes you intend. With a strong operations strategy in place, your business should be well placed to manage resources efficiently and maintain a motivated workforce.
A robust operations strategy can help your business to operate successfully. It explains the who, what, when, and how of a business’s day-to-day operations, bringing your colleagues together and helping you to manage your resources effectively. By supporting your overall company goals and keeping you focused on SMART objectives and realistic targets, a well-thought out operations strategy should make it easier to introduce new products and services and respond to market demands.
Be clear about the scope of what you’re defining – it’s either a vision for your overall business, or one specific area of your operations.
Focus on what matters – it may be better quality, faster delivery, improved loyalty from customers, or even better investment in employee satisfaction.
Ask for input on creating your operational strategy. Talk to people with solid experience and insights. You will often surface otherwise hidden challenges.
Set a realistic timeframe for assessing the operational strategy in detail, and for revisiting its content and objectives.
Choose effective metrics. Predictive measures will show what to expect in the future and let you to change course as necessary, rather than evidencing that you’ve fallen short after it’s too late to make changes.
Share your work – a clear operational strategy brings people together, streamlines operating processes, and keeps people focused on productive work.
Tools and templates
Next in the SMART Planning series
next: SWOT Analysis
Please note that these guides are provided for information purposes only and not as advice or recommendations. Before deciding to undertake any course of action you may wish to seek independent professional advice.