Operations and Strategy

Question: 

Why is there still conflict between business and operations strategies?

Gary's Answer: 

Because operations is internally focused and business strategy is externally focused. Operations seeks to improve the efficiency of internal activities, but business strategy seeks to improve the effectiveness of the organization in a competitive environment. Properly, we call skill in operation “management” not “strategy.” Operations management is about doing things right. Competitive strategy is about doing the right things.

These two types of activities are complementary but they necessarily conflict with one another. Operational management is objective. It seeks to delivery well-defined products of service in a predictable, consistent way. Management improvement means delivering the product more quickly with less cost. These are good necessary things as far as they goes.

The problem is that market needs are not static. Market position is subjective. not objective. It exists only in the minds of customers. Customers want consistent, predictable products and services, but they are also looking for constantly improving and novel products and services. This contradiction in the minds of customers is what makes it so difficult to satisfy market or predict market demands. Especially since customers do not know what they want until someone offers it to them.

Internal bureaucrats always want to plan for a future that is going to be just like the past. The problem is that the only thing that we know about the future for sure is that it will not be exactly like the past. Business strategy demands constantly adapting to changing market conditions. which are based on mysterious, unpredictable customer minds.

Operations never wants to change the definition of the product or service so operations can become more efficient. Strategy always demands that the product and service is improved over time so that the organization can be more effective in winning market share.