An intro to Strategy & Ops for Scale ups
Once start-ups have achieved product-market-fit and have made the transition into a scale-up, the need for improved strategies and processes becomes much clearer and a genuine pain point. The weight of Where are we going as a business? and How will we get there? heavily increases at this stage.
I’ve had the privilege of working with firms such as EY, Deloitte and Capgemini Invent, and I’ve had the greatest privilege of working with founders turning their dreams into reality.
Using my experience as a senior business consultant, I want to help more scale-up teams design strategies and implement them in their day-to-day operations.
This introductory article lays the foundation for improving knowledge around strategy and operations; in which I will continue to release content I hope will help teams make a tangible impact in their businesses.
So let’s get into it!
What strategy is & isn’t, and why your business needs it
Strategy is many things; it’s a vehicle, a pathway, a coordinated effort but strategy is definitely NOT A PLAN and a plan is definitely not a strategy. A strategy informs a plan and a plan enforces the strategy — always remember this.
I don’t want to deliver a thesis on strategy but I want to present a simple working definition that scale-ups can work with.
Based on my experience I like to describe strategy as an orchestra of choice. In the same way different instruments come together to deliver music, strategy is the coming together of a set of choices to achieve a business goal.
Those choices are made based upon 3 assessments
- The current state — Where are we now? (current state of the business and the market)
- The desired future state — Where do we want to be and when? (goals you want to achieve, blue oceans that have been identified etc.)
- The required effort to make the journey from current to future state (how the business needs to operate)
Once you’re clear on the choices you will make from your assessments, you can express your strategy using the Strategy diamond approach (check it out). In short, it is a framework that allows businesses to define their strategy across 5 main elements
ARENA — Where will we be active?
- market segments
- geographic areas
- core technologies used
- emerging opportunity areas
VEHICLES — What will we do to reach our chosen arena?
- strategic alliances
- joint ventures
- building out internal capabilities
DIFFERENTIATORS — Why will customers choose us ?
STAGING — How fast will we move and what sequence of steps will we take?
- key activities and milestones
ECONOMIC LOGIC — How will we generate profits?
- business model
- value chain
Understanding the link between strategy & operations
A Harvard Business Review study examined how 49 of the most successful companies spent their time and how that differed to other organisations. High-performing teams, compared to lower-performing teams, spent 54% more time first setting direction, crafting a vision that served as a guiding light for decisions regarding resources.
When it came to execution, lower-performing teams spent 83% more-time fire-fighting and dealing with issues at a tactical rather than strategic level.
What does this mean?
Weak/un-clear links between strategy and operations often result in inefficient and misaligned processes.
Using a delivery driver analogy, you know where you’re going and how to get there (you have a strategy in place), you’re delivering the pizza (i.e delivering your value proposition) but the drive didn’t feel great (your processes felt clunky and immature) and you picked up some damage along the way (your car wasn’t suited to the demands of the journey i.e. your business wasn’t designed effectively to deliver the strategy).
So what is the lesson here?
There are layers in everything, and business is no exception. If you want to understand how to translate your strategy effectively into your day to day operations then you need to have an appreciation for the layers that they operate in.
The digram below essentially highlights the following
- the strategic layer is where your vision, mission and strategy live. They must align and inform the business model
- the business model must inform how your value chain will be structured to keep on delivering value to customers
- the operating layer contains the operating model which provides the blue print on how to make everything real
- the tactical layer is informed by the operating model and is where you carry out the day to day operations
therefore, your ability to link your operations to your strategy is 100% dependant on how well your operating model translates the top layer into the bottom.
Operations often has a reputation for being boring and rigid but it’s actually (in my opinion) the most fluid component of every business that has deep interactions with all parts of the business.
Why Sales and Marketing is killing your business slowly
I’ve had the privilege of working with large global enterprises and the greater privilege of working with exciting new start/scale-ups; and the biggest issue I see is a hyper-fixation on sales and marketing and a sidelining of an agile operational design.
Focusing only on Sales and Marketing while neglecting operations is like focusing all your effort on inviting everyone over to a restaurant; the food (the value) may be great but if you have exposed wires all around, faulty appliances, inconsistent service, staffing shortages (the experience) etc., then eventually the food wont be enough to keep them.
— Come for the food; stay for the experience
Customer EXPERIENCE is king! … If the overall experience is the culmination of different working parts moving together like cogs then operations is the driving force behind successful customer experience.
So what is operations?
When people ask me what operations actually is, I give two answers — Here’s the first one.
“If your business is a living person, then operations is both the heart; that pumps blood and also the blood; that flows through their body — if the role of blood is to bring oxygen and nutrients to all the parts of the body to maintain functionality; then the role of operations is to supply the whole business with all it needs to keep creating (directly and indirectly) value for the customer
Ok that’s a nice definition but how does this practically link to business?
Keeping with the comparison to the heart & blood, the only reason both the heart can successfully pump and blood can successfully flow through the body as they do is because their positions and functions within the body are determined by the overall design of the body; therefore solid operational design is dependent on solid business design <- more on this in future posts
With an increasing shift in focus from profitability to invest-ability (which I think is damaging), venture funding often masks fundamental issues in the operational design of most businesses; which left unchecked can cause serious long term issues.
Operational design must be informed by the overarching strategy, here is where my second definition of operations comes in
Operations is the ability to successfully manifest the strategic intent of the business ; ensuring all parts of the business are equipped and enabled to work together effectively across the value chain.
So if you’re serious about growing a successful business over the long term, then you absolutely should not neglect operations.
How my operations canvas can help make better operational decisions
A common mistake I see many founders make is not linking operational decisions to the overall strategy of the business. As highlighted in the diagram above; the operational layer is the bridge between strategy and execution, the success of your execution is 100% dependent of how well you can operationalise your strategy.
To make the operational decision making process easier for teams, I’ve created my version of an operations canvas (drop me a message if you want a copy)
- Ensuring the right people are doing the right things in the right way at the right time
- Renumeration, reward & Recognition — How will people be rewarded for their efforts? (e.g., salary, bonuses, shares, staff perks etc)?
- Learning & Development — How will the business ensure its people are constantly learning & developing?
- Culture — How will leadership create the right environment for a good working culture among its people?
- Recruitment — How will the business recruit and retain the right people?
- Creating, capturing and delivering value efficiently
- How can we get end-to-end clarity on key processes in the value chain (SIPOC tool really helps here!)
- What is the best way to communicate processes across the business?
- Maintaining continuous improvement
- What does success look like?
- What are the right metrics to measure performance against strategic goals?
- How will performance data be accurately sourced, managed and measured?
- Creating and maintaining strategic relationships
- What (internal/external) partners/ suppliers are required to deliver value?
- Establishing the right structure to make efficient and effective decisions
- Org design — What structure needs to be in place for decision-making?
- Roles & Responsibilities — What roles and responsibilities are necessary across the value chain?
- Having the right supporting technology and infrastructure
- Technology — What technology is required to efficiently deliver across the entire value chain?
- Intellectual Property — What information must be retained/protected to maintain the value proposition?
- Assets — What assets are required and where/how should they be sourced?
- Protecting the integrity of the business
- Security — What physical / online security will be required?
- Risk — How can risk be identified and mitigated?
- Decisions — How will decisions be made around security?
Thanks for reading, I hope you’ve been able to gain some value from this post.