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.
Aspect
Strategy
Operations
Focus
Concerned with setting long-term goals, defining the overall direction of the organization, and making high-level decisions to achieve these objectives.
Concerned with executing day-to-day tasks, processes, and activities to meet short-term goals and ensure the efficient functioning of the organization.
Timeframe
Focuses on the future, often with a time horizon of several years or more.
Primarily focuses on the present and immediate future, typically within a time frame of days, weeks, or months.
Scope
Involves making decisions related to the organization’s competitive positioning, market entry, product development, and resource allocation.
Involves managing routine activities, production processes, supply chain logistics, customer service, and other operational aspects.
Decision-Making Level
Typically made at the top levels of management, such as CEOs and executive teams, and involves major strategic choices.
Made at various levels of the organization, from middle management to front-line supervisors, and involves day-to-day operational decisions.
Goal
Aims to create a sustainable competitive advantage, drive growth, and adapt to changing market conditions.
Aims to ensure the smooth and efficient functioning of the organization, meet customer demands, and deliver products or services on time.
Measurement
Often measured using key performance indicators (KPIs) related to market share, revenue growth, profitability, and market positioning.
Measured using KPIs related to efficiency, productivity, quality, delivery times, and cost control.
Example
– Developing a market expansion strategy. – Deciding on a product portfolio. – Setting pricing and positioning strategies.
– Managing production schedules. – Optimizing supply chain logistics. – Handling customer inquiries and orders.
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.
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 growthstrategy.
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.
Case Studies
1. Restaurant Business
Strategy:
Deciding to focus on farm-to-table cuisine to tap into the growing trend of organic, locally-sourced food.
Collaborating with local farmers to ensure a supply of fresh ingredients.
Operations:
Training the kitchen staff on preparing farm-to-table dishes.
Setting up a supply chain to receive and store fresh ingredients from local farms.
2. E-Commerce Platform
Strategy:
Expanding into new international markets to grow user base and revenue.
Collaborating with local influencers in those markets for promotions.
Operations:
Developing multi-language support on the platform.
Setting up local warehouses for faster delivery.
3. Automotive Manufacturer
Strategy:
Developing electric vehicles (EVs) to capture the growing market for sustainable transportation.
Partnering with battery manufacturers for a consistent supply.
Operations:
Setting up a new production line for EVs.
Hiring engineers with expertise in EV design and production.
4. Fitness Gym Chain
Strategy:
Offering virtual classes to cater to a wider audience and those preferring home workouts.
Collaborating with fitness influencers for online sessions.
Operations:
Training instructors on conducting virtual sessions.
Setting up a robust online booking system for members to choose classes.
5. Software Development Company
Strategy:
Diversifying into cloud computing solutions seeing the growing trend of businesses moving online.
Partnering with established cloud service providers for better infrastructure.
Operations:
Hiring or training developers in cloud-based software development.
Setting up customer support teams to handle cloud service inquiries.
6. Fashion Retail Brand
Strategy:
Launching a sustainable clothing line to cater to the growing demand for eco-friendly products.
Collaborating with eco-friendly material suppliers.
Operations:
Training the design team on sustainable fashion principles.
Adjusting supply chains to procure sustainable materials.
7. Mobile Phone Company
Strategy:
Diversifying into the budget smartphone segment to capture a larger market share.
Collaborating with other tech companies for bundled software offers.
Operations:
Setting up a separate production line for budget smartphones.
Negotiating with suppliers for cost-effective components.
8. Music Production Company
Strategy:
Focusing on promoting indie artists to tap into the growing indie music trend.
Collaborating with popular music streaming platforms for exclusive releases.
Operations:
Hiring talent scouts with an ear for indie music.
Setting up recording studios suited for indie music production.
9. Tourism Agency
Strategy:
Offering eco-tourism packages seeing the trend of sustainable travel.
Partnering with local communities in popular destinations for authentic experiences.
Operations:
Training tour guides on eco-tourism principles.
Collaborating with local transport providers for sustainable travel options.
10. Bookstore Chain
Strategy:
Launching an online store to cater to the growing demand for e-books and online purchases.
Collaborating with popular authors for exclusive online releases.
Operations:
Setting up a user-friendly online shopping platform.
Ensuring a robust digital payment system for smooth transactions.
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 growthstrategy 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 Insights
Complementary Roles: Strategy and operations play complementary roles in a company. Strategy outlines the long-term vision and goals, while operations define the day-to-day execution to achieve those goals.
Efficient Functioning: When both strategy and operations work efficiently, the company moves forward purposefully and in alignment with its vision. If one aspect is neglected, the company may face challenges and fail to achieve its objectives.
Importance of Operations: Operations are crucial as they involve the day-to-day running of the business and provide valuable insights into what works effectively. Leveraging operational staff can lead to value creation, increased sales, and better business performance.
Strategic Direction: Strategy guides how operations are performed and should ideally create a competitive advantage for the company. It ensures that all operational efforts are aligned with overarching goals and objectives.
Real-World Example: IBM’s acquisition of Red Hat exemplifies how strategy and operations are interlinked. The deal was driven by a growthstrategy to compete in the cloud computing sector. Post-acquisition, various departments underwent evaluations and adjustments to align their operations with the growthstrategy.
Continuous Evaluation and Adaptation: A successful business requires ongoing evaluation and adaptation of both strategy and operations to remain competitive and achieve sustainable growth.
Context
Strategy
Operations
Business Management
A business strategy outlines the long-term goals, competitive positioning, and growth plans of a company, including market expansion and product diversification.
Business operations encompass the day-to-day activities, processes, and systems that ensure the efficient production, delivery, and support of products or services.
Military Strategy
Military strategy involves planning for national defense, including decisions on troop deployment, tactics, and overall campaign objectives during a conflict.
Military operations refer to the execution of military strategies on the ground, involving troop movements, combat engagements, and logistical support during battles.
Sports Coaching
In sports, a coaching strategy includes game plans, formations, and player strategies for achieving victory in a specific match or competition.
Sports operations involve the practical aspects of training, such as practice sessions, conditioning drills, player rotations, and in-game decision-making by coaches.
Manufacturing Industry
A manufacturing strategy may involve decisions on market positioning, product development, and supply chain optimization to gain a competitive advantage.
Manufacturing operations encompass the assembly line, quality control, inventory management, and production scheduling to ensure the timely creation of products.
Healthcare Management
Healthcare strategy may include plans for improving patient care, expanding medical services, or entering new markets, considering long-term goals and patient outcomes.
Healthcare operations involve daily patient care, hospital administration, staff scheduling, and resource allocation to provide efficient medical services and treatment.
Education Institution
Educational strategy focuses on long-term objectives such as curriculum development, educational policies, and research initiatives to enhance academic excellence.
Educational operations encompass the daily teaching, classroom management, student assessment, and administrative functions required for effective learning and teaching.
Logistics and Supply Chain
A logistics strategy may entail decisions on transportation modes, warehousing locations, and supplier relationships to optimize the supply chain network.
Logistics and supply chain operations involve the physical movement of goods, inventory control, order fulfillment, and distribution to meet customer demand efficiently.
Technology Company
A technology strategy may include plans for innovation, R&D investments, and market expansion, aiming to position the company as a leader in its industry.
Technology operations encompass software development, IT support, network management, and data center operations that maintain and deliver technology solutions.
Nonprofit Organization
Nonprofit strategy outlines goals for fundraising, community engagement, and program expansion to fulfill the organization’s mission and make a positive impact.
Nonprofit operations include program execution, volunteer management, donor relations, and financial stewardship to deliver services and achieve the organization’s mission.
Retail Industry
Retail strategy may involve decisions on pricing, merchandising, and customer experience enhancements to attract and retain customers in a competitive market.
Retail operations include store management, inventory control, sales transactions, and customer service activities that ensure a smooth and efficient shopping experience.
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.
You can use the Ansoff Matrix as a strategic framework to understand what growthstrategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growthstrategy can be derived from whether the market is new or existing, and whether the product is new or existing.
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
