6. Attraction and development of people. Many companies proclaim that people are their most important asset (though few behave as though they believe it). All operations capabilities depend on people, and, accordingly, a comprehensive operations strategy must explicitly address how the company will attract, develop, and retain the right people. Management gurus laud General Electric Company’s Crotonville learning center and its succession planning process for developing executives. GE’s scale and diverse businesses justify its investment in managers who can move around the company to provide fresh energy and perspective. Few competitors can match its ability to develop great executives.
From Theory to Practice?
As Wickham Skinner highlighted 40 years ago, and the examples above reinforce, the operations decision areas require trade-offs. Furthermore, even the best management has bandwidth limitations, forcing prioritization. As Michael Porter noted, strategy involves deciding what not to do as much as it does what to do. An operations strategy offers guidance for decisions related to structural investments as well as investments in capability building. The consistency, or “fit,” among these structural decisions and operational capabilities determines the company’s effectiveness in achieving the desired positioning articulated by the overall corporate strategy.
Although it is true that most companies do not explicitly articulate an operations strategy, the decisions made by operations executives ultimately produce — or erode — competitive advantage. Are you certain that your operations managers know the right choices to make — or are they mindlessly pursuing “best practices”? If you have not explicitly articulated an operations strategy to guide your managers, odds are they are on the dreaded treadmill described by the Red Queen in Alice’s Adventures in Wonderland: “Now, here, I see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” Give them guidance from your business strategy and perhaps they can create competitive advantage instead.
Reprint No. 09402
- Tim Laseter holds teaching appointments at an evolving mix of leading business schools, including the London Business School, the Darden School at the University of Virginia, and the Tuck School at Dartmouth College. He is the author of Balanced Sourcing (Jossey-Bass, 1998) and coauthor, with Ronald Kerber, of Strategic Product Creation (McGraw-Hill, 2007). Formerly a partner with Booz & Company, he has more than 20 years of experience in operations strategy.