Operations Strategy There’s nothing here to take by storm; to strategy we must conform. Johann Wolfgang von Goethe (Faust,1808)

Market Driven, Technology Driven Strategies This "top-down and outside-in" ensures that operations reflect the intended market position. Market driven strategy creates a customer-driven organization. In “a bottom-up and inside-out”, the building blocks of strategy are not products and markets, but processes and resources. The value proposition offered to customers seeds in the operational capabilities. The technology driven strategy creates a resource-driven organization.

Market Driven, Technology Driven Strategies Organizations must maintain alignment by adopting both perspectives. In order to satisfy a new customer need, the firm may need to build new competencies, processes, and resources. Those operational capabilities may later be used to invent new products and services that may create new markets. Honda's abilities and knowledge in high-performance engine technology has been the driving force in deciding which markets to enter and which products to offer.

Tailor Operations; Strategic Fit Tailoring  fitting the operational system to competitive strategy. Frederick Winslow Taylor (the father of scientific management); there is a "one best way" to configure any operation. No, the best operations configuration depends on the Strategy + Market. Strategic Operational Audit Does operations competencies fit with competitive strategy? Where can improvements be made? Top-down and bottom-up perspectives simultaneously and can be performed in three steps.

The Strategic Operational Audit Understand your customer & your competitive strategy  CVP the current operational system; resources, processes, and competencies.   Apply the resource & process views (bottom-up)  the value propositions the current competencies can support. Apply the market (top-down) to specify the competencies, the best-aligned processes and resources, needed to execute the current strategy.   The gaps between the current state and where we should be to ensure strategic alignment. Gap reducing actions to improve strategic alignment. These actions involve changing the competitive strategy and/ or changing the operations strategy.

Strategic Operational Audit Operations Strategy Week #1: Concept & Framework 7/31/2018 Deliverable Value Propositions Value Proposition Strategy Gap? Resource view Market view Competencies Needed Competencies Competency Gap? Pro’s and con’s of either view? Which view did your organization tend to take? Market view = “outside-in, top-down” Hierarchical view induces “fit” between markets and functions: All functional strategies, including operations’, should reflect intended market position of the organization & and will evolve accordingly Market perspective suggests customer-driven performance measures But… this is a reactive view Resource-Process view = “inside-out, bottom-up” Advantage: Drives innovation & markets: Resource-based view induces fit between capabilities and strategy = “leverages your core competencies” Resource perspective suggest resource-driven performance measures But… do customers want this? Danger: (Fujimoto, advisor to Nissan’s Carlos Goshn) “productivity forgets what features customers want”. THUS: We should apply both views! This leads to SOA. Think of the SOA as a three step audit… Explain Deliverable value props = Which market positions can we occupy and how can we protect us from competitive threat? * Alignment in the large: McK: operating system (engine), mgt infrastructure (dashboard), mindset & behaviors (willing driver). Draw three circles if time. Resources & Processes Needed Resources & Processes Resource & Process Gap? © Van Mieghem