12/03/2015

Reimagining operations

Author: Mark Strom, Principal, Global and US Operations Consulting Leader   Mark.Strom.08042013.mstrom003.Advisory.ProductServicesIndustries-F

It’s almost too familiar to address, but it still needs to be done. I’d estimate that at least half of the companies my teams work with would benefit from having more incentives for operations leaders to collaborate proactively and achieve business rather than functional goals. Think about it: when one team tries to innovate, they often come into direct conflict with an operational assignment to cut costs – or they create some new beast that’s harder to manage than the last ‘big idea’. Decisions are made without consultation or strategic grounding. Politics slow implementation down. Tribes form. And this behaviour entrenches people even further into their inward-looking behaviours.

Today’s operations teamsi need reimagining. They need more people who are adept at creating the enterprise ‘fabric’ (social, process, technological) to deliver what customers truly value. In our latest Global Operations Survey, 61% of operations leaders say cross-functional collaboration has the greatest potential for helping the company reach its strategic goals.

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Beyond the silo-busting basics

Some practices are fairly basic for breaking down functional silos in well-run companies. You can look for these signals easily:

  • Do you reward performance based on contributions to the overall strategy?
  • Are operations leaders routinely involved in strategic decisions about products and services?
  • Are operations projects routinely funded based on enterprise strategy?

Today, we see leading companies do much more beyond the basics. They start with a deep understanding of what customers value and then reimagine how to deliver it. Our survey shows that a striking three out of five operations leaders (63%) say that understanding what customers value is a challenge for company operations, yet few (25%) feel very confident that their operations are designed to deliver value and a distinctive experience. Reimagining operations centers on the customer and the small, yet focused set of capabilities that are designed to differentiate the company and drive competitive advantage. These choices are set at the top, and operations leaders define how they’ll contribute to making each capability work. With a capabilities-driven mindset, functions aren’t so inward facing – their attention shifts to a bigger picture that’s connected to customers.

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Effort here is worthwhile, even though it may be a longer-term investment. In our survey, more strategic companies are far more likely than everyone else to focus on building a few differentiating capabilities to drive a competitive advantage (51% vs. 29%). They’re also more confident they’ll achieve a broad set of performance objectives: achieving revenue and cost targets, driving strategy, providing a distinctive customer experience, and adapting to change. Other research points to performance differentiators from capabilities-driven strategy too.

So, which capabilities define your company in the eyes of your customers? Asking this question helps you align operations with the company strategy and make clear choices about what will set you apart. 

If you’ve had experience with a capabilities-driven strategy we’d like to know how it’s been going. Has it been a silo buster? Has it improved operations decision making in your company? Share your experiences with us in the ‘comments’ sections below.

Mark is PwC’s global lead for the Operations competency with responsibility for coordinating the practice across the PwC network, including operations transformation, product development, procurement and sourcing, production and supply chain operations, service operations, and asset lifecycle management. 

 When we talk about operations we mean both core and support. Core operations typically include: product, services and technology development, marketing and sales, customer services and support, sourcing/procurement, supply chain, manufacturing, and production. Support operations typically include: governance, human resources, information technology, legal, finance, and data analytics.

 

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