Strategies are roadmaps that outline a company’s vision for the future and how supporting goals and objectives will be achieved. Operations, on the other hand, define how each department within a company plans to carry out the Strategy on a weekly, monthly, or quarterly basis.
Understanding strategy and operations
To understand the relationship between strategy and operations, we like to think of each as an outboard motor on a boat.
When both motors are operating efficiently, the boat moves forward purposefully and in a straight line. When only one motor is running, however, the boat veers to one side, completes a circle, and ends up where it started.
When a Business focuses on operation and ignores strategy, its longevity is compromised.
When operations are sacrificed for strategy, the business does not understand its operational capacity – or what it can produce in a given amount of time.
This results in a strategic plan without any real substance since leaders do not understand the needs of customers or the wider industry.
Operations are important since many employees are involved in the day-to-day running of the business and can provide valuable information about what actually works.
Put another way, the business can leverage its operations staff to create value that drives sales and meets business objectives at the same time.
This also ensures that the business secures an adequate ROI on operation activities that can be resource-intensive.
Strategy is also important for another reason. It defines how operations are performed and, in an ideal world, secures the company a newfound competitive advantage.
This makes strategy a vital tool in creating and sustaining success that is aligned with overarching goals and objectives.
Strategy vs. operations example
With Microsoft and Amazon dominant in the cloud computing sector, IBM executives knew they needed to do something radical to compete.
In response, IBM acquired Red Hat in a landmark deal worth $34 billion that was ultimately driven by a growth strategy to become the leading hybrid multi-cloud provider.
While the deal was made public in 2018, IBM executives were no doubt discussing it many months or years beforehand.
This was particularly important for a deal as complex as the acquisition of Red Hat, which necessitated that every IBM department was evaluated and redefined to ensure it supported the company’s growth strategy.
The sales department, for example, would likely review processes, metrics, content, and tools post-acquisition and then adjust operations to enable sales teams to increase revenue.
The customer service department would also undertake a similar review to determine what changes were necessary to ensure customer success and loyalty.
Key takeaways:
- Strategies are roadmaps that outline a company’s vision for the future and how supporting goals and objectives will be achieved. Operations define how each department plans to carry out the strategy on a weekly, monthly, or quarterly basis.
- When a business focuses on operation and ignores strategy, its longevity is compromised. When operations are sacrificed for strategy, the business does not understand its market, customers, or growth potential.
- IBM’s deal to acquire Red Hat was in line with the company’s growth strategy to create a new market in cloud computing. At the departmental level, the deal necessitated that various operations be altered to support the strategy post-acquisition.
Key Components of a Business Model
Value Proposition
Cost Structure
Pricing Strategies
Financial Structure
Technological Modeling
Distribution Channels
Marketing Channels
Other related business frameworks:
- AIDA Model
- Ansoff Matrix
- Business Analysis
- Business Model Canvas
- Business Strategy Frameworks
- Blue Ocean Strategy
- BCG Matrix
- Porter’s Five Forces
- VRIO Framework
Additional resources:
- Business Models
- Business Strategy
- Distribution Channels
- Go-To-Market Strategy
- Marketing Strategy
- Market Segmentation
- Niche Marketing
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