Operations Strategies 101-201: Definitions, Process, Plans, Pro Insights

Now, our seven pros weigh in with their tips for creating and implementing effective operations strategies. Robin Speculand and Tim Lewko were interviewed by phone, and the five others submitted responses in writing.

Paraphrased from a phone interview, Robin Speculand advises using the Triple A model of alignment, accountability, and assessment.

1. Alignment: Keep the team focused on balancing long-term and short-term perspectives. Many people trip up on this. To be aligned, you can’t just drive your individual silo. Don’t assume all plans are in alignment. You need consistent direction.
2. Accountability: Introduce a culture of holding people accountable. Make sure people know what’s important, and hold to your operational strategy. It’s one of the easiest areas to make a massive impact in. In such a culture, your boss checks in every week to see how you’re doing. It’s also important to link accountability to rewards and recognition.
3. Assessment: You have to be able to assess how you’re doing at any point in time. You need to measure with numbers.

Paraphrased from a phone interview, Tim Lewko offers these tips:

1. Define what an operations strategy means in your organization. Create a common definition because different definitions can cause communication breakdowns.
2. Operations should follow from the company strategy. Business strategy is the “what,” and operations is the “how.”
3. An operations strategy is an investment in current and future capabilities underpinned by visible assumptions. For example, if an auto company considers building a plant in Mexico, it’s making assumptions about labor, capital, and trading. What does the team see as the future for the business? It’s important to state the assumptions. When FedEx built a runway in China, some people questioned the move. But FedEx saw a future market there.

苏珊Ho说,“找出你想accomplish and how you’re going to measure success. When I first joined Fab.com, one of our biggest issues was communicating to customers about late deliveries — when, for whatever reason, a supplier would be late in shipping a purchase order to our warehouse, or our warehouse would take longer than expected to ship product out to customers. When shipments were late, customer complaints would pile in. We decided that we’d track the number of late shipping complaints as a percentage of total orders and use that as our barometer for success.”

She continues, “Get all the teams that touch a process into a room together. (Major caution on this one.) This idea is actually much more complicated than it seems. If you just take this step alone, you’ll most likely have a horribly unproductive meeting where everyone is more angry at another team than before they walked into that room. As an operations strategist, my first step is to talk to key people on each team separately - not a VP or director-level necessarily, but a few people who are actually responsible for the day-to-day work. I have them walk me through their process end-to-end, and, then, I map it out and review it with them. Then, we can point out areas on the process map where a handoff between teams is breaking down, or there’s an SLA (service level agreement) that we haven’t clearly defined that’s leading to confusion about what to do. Once I do this with every team, I come up with a master list of issues and proposed solutions, along with the pros and cons of those solutions. Only then do I get the senior decision makers in a room together, so we can walk through each point and make a decision on questions like, ‘What team should ultimately own this?’ and ‘Should the cut-off point be two days or one day?’”

“Properly aligned employee incentives are a key factor for long-term operational success,” says Levy. “What many companies have found is that granting stock as a form of compensation has strong positive effects. When you lease a car, you treat that car much differently than one you own. You probably don't clean the car as often, make hard starts and stops, etc. When you own a car, you are much more careful to treat it well, so it stays in good condition over the long term. When employees own stock in a company, they make decisions that are better for the long term.”

Levy adds, “An organization must assign accountability to only one person for key functions. More than one thing will fall through the cracks. An example in our businesses is ensuring we assign each reservation to the appropriate bus company. We have centralized accountability for every trip with our operations manager. He can delegate the work but is the only one accountable. Finally, When errors occur, ask “Why?” five times to determine the true cause of the error. Toyota has a great system of doing just that to get to the root of any error. We have found that this works great in our business as well. This way, you can easily get to the true cause of any operational failure and create a system to prevent it next time.”

Suresh Dalai offers the following points:

“1. Make it consumer-driven. Whatever operations strategies you develop, ask whether they help drive superior experience for the consumer — for example, accelerating production so that the consumer can get it faster, improving quality, etc.
2. Make it end-to-end. Many people may think of operations as a back-office activity, such as production or logistics. However, an operations strategy focuses on the entire value chain, fromplantomaketomoveand then ultimately, tosell. Ensure that your operations strategy covers all four areas.
3. Make it well-understood by your team. Educate your organization so that everyone understands that operations strategy is always about the consumer.”

Cristian Rennella recommends the following:

“1. I recommend not trying what first comes to your mind. Before putting something into practice, check that you have all the resources, adequate personnel, and enough time. In some cases, assuming in advance that an idea is going to work can be as expensive as an unsuccessful test.
2. Have a sole responsible person. It is important that tasks are well organized, and, for this reason, more than one person in one single activity can be problematic. For example, at elMejorTrato, I am the one in charge of link building, and I take for granted that any related activity depends on me.
3. Have an adjustable working guide. Although it is useful to have a guideline, we always have to be prompt in adapting it to new situations. The market is an environment affected by continuous change, and it is essential to follow the herd (customers), modify rules, and make contributions.”

“First, you have to know your team,” says Fajardo. “Understand their strengths and weaknesses. You need to make sure that you are playing to their strengths. Otherwise, they'll never be able to implement your strategy. Second, know the process. Anybody can determine a bottleneck when they see it, for instance, but do you know the process well enough to know why it happened? Third, you can't assume you know everything. Don't be afraid to read articles on how your competitors tackle operations problems.”