Turning Operational Strategy into Results for Your Business

It’s All Led Up to This

You and others in your organization came together to build a plan to put an operational strategy into action. Then, with goals identified and teams aligned, you began the work of implementing your operational strategy — the journey of putting the pieces into place while navigating and adapting to shifting business goals, industry trends, and other unforeseen circumstances. When this was completed, you started to execute on your operational strategy — making decisions and taking action to achieve the desired results.

Depending on your organization, your operational strategy goals, and your industry, this process could’ve taken anywhere from a few months to a few years. Regardless of the time needed to complete these initial steps, you must now assess how the operational strategy has performed. Now, it’s time to turn strategy into results.

Along the way, you may have performed periodic check-ups to monitor progress (part of implementation). You may even have an ongoing dashboard set up to capture progress and provide analytics in real-time through a business intelligence platform like Tableau or Power BI. But the data you produce throughout your operational strategy process doesn’t intuitively measure the type of results the strategy was intended to produce.

So, What Does Turning Strategy into Results Actually Mean?

Before we begin exploring the process of capturing the results of your operational strategy, we need to review a couple of important details about the strategy as a whole. After all, it’s not just about the destination — it’s about the journey itself.

Everything You’ve Done So Far Has Mattered

Mistakes and changes are to be expected when rolling out an operational strategy, but if the respective areas of focus and goals of the action, implementation, and execution phases were lost, forgotten, skipped, ignored, etc., achieving the results you’ve been hoping for will be virtually impossible. That’s because these phases are interdependent.

A clear and well-defined action plan will have been for naught if implementation didn’t put the right pieces into place. All of the hard work of implementation will have been wasted if no one was able to execute on it effectively. And execution will amount to nothing more than confusion and frustration without a strong foundation established in the action plan. Each step sets the stage for the next, and each step is also a reflection of the former. They must be given the proper attention from start to finish to ensure the success of your operational strategy.

Ultimately, Business Value Was Always the Goal

The second consideration is that from the beginning, everything you’ve done was intended to achieve one thing: business value. These are the metrics that reveal how your business has performed operationally. They are quantitative measures that lead to qualitative outcomes. It’s rarely the reverse because a business is not an abstraction. It’s a goal-oriented construct that aims to do X to achieve Y and realize Z. You don’t do X to achieve Y for no Z.

For example, if you successfully reduced manufacturing waste by 25 percent, that can lead to several qualitative benefits. These include increased employee satisfaction (from being able to produce the same results with less effort) and increased customer satisfaction (from fewer steps in the production process leading to shorter lead times). But you could not realize a reduction in manufacturing waste by focusing on increased customer satisfaction first. Happier customers don’t make your production shop more efficient. More advanced machines, streamlined processes, and innovative technology do.

And it might go without saying, but your results must be what was called for in the operational strategy all along. If your goal was a 25 percent manufacturing waste reduction, then achieving a 10 percent increase in raw material processing efficiency — rather than the 25 percent waste reduction — doesn’t satisfy the strategic goal. It’s great that you’ve realized the efficiency benefit, but that’s subordinate to your overall goal.

Measuring the Results of Your Operational Strategy

It’s important to remember that the method you use to measure the results of your strategy should have been set in the action plan. After all, how can you set a goal without understanding the criteria for success or failure? You can’t. If your action plan didn’t contain the criteria for future evaluation (subject to changes in implementation, of course), then the action plan itself was a failure and all phases following it won’t succeed.

Note that if the implementation phase produced changes to the action plan, then the criteria for evaluation may have changed as well. Remember, each phase of your operational strategy is a living thing: just because you’ve moved on from action to implementation doesn’t mean the plan can’t or shouldn’t be modified to ensure that the implementation phase matches your organizational objectives. If things change along the way, ensure that you’re revisiting the action plan and making adjustments as necessary.

So what does measurement actually look like? While the tools you have available for managing the strategy and the methods established in your action plan will provide the actual metrics you’ll use and review, what you actually need to measure is the result of the result. Let’s jump back to the 25 percent manufacturing waste reduction. What is the actual result of achieving that? So you’ve cut waste by a quarter — great! What does that mean?

It could mean any number of things, but it has to align with your organization’s objectives. Reducing waste means your warehouse has less unusable scrap or material to deal with. Employees no longer have to haul it away, which saves you time and money. You no longer have to purchase as much raw material from suppliers to meet your production demands, which further reduces your costs. And your machines are technically processing less material for production, which helps reduce equipment wear, downtime, repair costs, and so on. The common theme shared by these examples is cost reduction, which as you know is a common strategic objective.

All of the quantitative and qualitative results of your operational strategy objective of reducing waste by 25 percent have generated meaningful benefit for your business — one that is reasonably easy to measure and quick to realize: less money spent for the same or better output. Congratulations! You’ve successfully turned strategy into results for your business.

Managing Operational Strategy is a Strategy Itself

While some organizations have dedicated project managers, business intelligence teams, and even strategists and analysts who can lead initiatives like this, the reality is that there are far more businesses that don’t have these specialized employees. According to Deloitte, there are around 29 million small and medium-sized businesses (SMBs) in the U.S. with fewer than 500 employees (representing 99.7 percent of all U.S. businesses), many of which are presumably lacking resources to lead these strategic initiatives. This is where working with an experienced third party can help.

At River Rock Advisors, we assist manufacturers, distributors, and other organizations in developing operational strategy, ensuring internal alignment and progress, and providing comprehensive analysis from start to finish — all for the ultimate goal of delivering business value to our clients. If there’s untapped potential in your value chain, reach out to us today.

2019-06-19T10:57:00-04:00