The Strategy-Operations-Tactics Continuum

Posted: March 1, 2010 in Powerful Ideas

It is often said that strategy never fails in formulation, only in implementation. This is an explicit admission that just about anyone who takes the trouble can come up with a strategy. The real challenge comes in implementing it. This has certainly been my experience in working with many of my strategy clients.

Unfortunately, most literature on the topic of strategy is focused on formulation, on coming up with a good strategy. Strategy formulation is critical, but there is much less written on the topic of implementation, on turning the strategy into successful action throughout an organization. I believe this is due in large measure to the difficulty of identifying the exact action steps to get from the strategy to its operational implementation and the day-to-day tactics needed to make it a reality.

I will address the issue of operational implementation planning and tactics in future newsletters. In the meantime, the following diagram provides a framework for understanding the three levels of managerial action and thought in any organization or business, what I like to call the Strategy-Operations-Tactics Continuum.

The framework shows how strategy, operations, and tactics differ along three essential dimensions: impact, constraint, and responsiveness. The counter-clockwise downward spiral depicted in the diagram also shows how strategy, operations, and tactics are related and linked to each other in a continuum. Strategy sets the context for, and depends upon, operations, which in turn set the context for, and depend upon, day-to-day tactics, behaviour and actions.

Strategy should be wide in scope, relatively unconstrained, and highly responsive to the external environment, especially clientele and competitors. Strategy is meant to have a major impact on the organization by defining its raison d’être (mission), its fundamental value proposition, how it is perceived (positioning), and the broad objectives and priorities to achieve these aims. Strategy must also be highly responsive to changes in the internal and external environments, even while trying to shape these to the advantage of the organization. Finally, strategy requires imagination in formulation and application. There are generic strategies – examples would be price leadership and product differentiation – but the reality is that there must be considerable thought on how these strategies actually apply to a particular business or organization. This requires that senior managers act in a relatively unconstrained manner, with imagination and innovation.

The tactical level of management is similar in many ways to strategy, though they differ fundamentally in their overall impact. A good way to remember the distinction is that the word strategy comes from the ancient Greek work for generalship (strategeia), whereas tactics can be thought of as what happens when troops are in contact with the enemy: tactics = tact = touch.

Tactical art requires a relatively unconstrained approach to problem solving, and considerable initiative and imagination in achieving objectives. Tactics must also be highly responsive to changes in the environment, or else they will fail. Decisions and actions at the tactical level must conform to the strategy and operational systems of the organization, but they are usually limited in impact to immediate objectives and interactions.

The operational level of management is really where the strategy gets translated into action throughout the organization or business. Operations are the systems, processes, structures, and capital that are needed to implement the strategy. This is usually where strategy implementation fails, because the leadership of the organization did not create the operational infrastructure to support its strategic objectives. For instance, if a business decides to position itself as highly innovative, it is imperative that it have the systems in place to generate innovation and to nurture it, or at least to recognize and reward employees who come up with new products and services or new ways of doing business.

One of the key things to remember about the operational level, however, is how it differs from strategy and tactics. Whereas the latter are externally focused, highly responsive to the environment, and more “art” than “science,” operations are more “science” than “art” and are designed to constrain the inner workings of an organization. Moreover, while operational systems and structures must evolve over time, they should not change on a day-to-day basis with every whim of management or perceptions about the external environment.

The whole point about operational systems, structures, processes and infrastructure is that they provide a framework for achieving the strategic aims of the organization or business. Managers and employees then have a set of rules and algorithms for solving problems, whether these be production methods, HR practices, customer order processing, supply chain management or any number of other aspects of the business that are amenable to analysis and specified solutions.

In summary, managers and line employees implement strategy on a day-to-day basis by applying tactics to sell, motivate, influence, decide, produce, etc. However, it is through the creation and implementation of operational systems, structures, processes, and capital that managers and employees are enabled and supported in actually applying the strategy.

© 2010 Richard Martin. Reproduction and quotes permitted with proper attribution.

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