In one line: Strategy decides what the business will become, and operations decide how to get there. A good strategy picks a single driving force and builds everything around it.
Core idea
Michel Robert [1] argues that most management teams spend nearly all their attention on operations, such as costs, schedules and quality, and almost none on strategic thinking: a deliberate picture of which products, customers, markets and geographies the company will emphasize in the future, and which it will drop. Operational excellence without that picture can bring success for a while, but not over the long term. A clear strategy without operational strength rises and falls with the market. Only the combination lasts.
How it works
- Find the driving force. Robert identifies about ten candidates. Examples include the product or service concept, a class of users, a market category, production capacity, technology or know-how, a sales channel, a distribution method, natural resources, size, and return or profit. One of them is the company’s real engine. The key questions are what it is today, what it should be, and what follows for products, customers and markets.
- Pick only one. Trying to be driven by several forces at once confuses the market and leaves the company excellent at nothing. Profit is a result of the strategy, not a driving force. Basic improvements in quality, service and cost are expected of everyone, so they don’t count as strategy.
- Write it down briefly. A strategy or business concept statement of a paragraph or two names the driving force and where it will be applied. People can act on a short statement far more easily than a long one.
- Build two or three areas of excellence. These are the specific skills the driving force requires, and they get priority when resources are allocated. A technology-driven company, for instance, needs strong research and the ability to find new applications for it.
- Leverage and change the rules. Apply each capability across as many products and markets as possible. The strongest move isn’t to beat competitors at their own game, but to change the game so that their strengths matter less.
In practice
For an engineering group, the driving-force question is practical. If the company is technology-driven, the strategy is to find new markets for what it knows how to do. If it is customer-driven, it is to find new products for the customers it already serves. The two lead to very different R&D portfolios, so engineers who know which one their company is can predict which projects will be funded.
Questions to ask yourself
- What is my organization’s real driving force, judging by what it does rather than what it says?
- Could I state our strategy in two sentences that would help someone choose between two projects?
- Which two or three areas of excellence does our strategy depend on, and are we investing in them?
Connections
- Lighter-weight version: Five Questions for Strategy. Industry context: Porter’s Five Forces.
- Where strategy is written down: Vision and Mission. Where it turns into projects: Product Planning.
- When the strategy must change: Business Transformation. The same analysis for one person: Personal SWOT.
- Capabilities exercised: Vision, Decision Making, Realizing the Vision.