The Connection between Strategy and Operations
In Monday’s post I talked about Rita Gunther McGrath’s HBR article on Transient Advantage. She suggests that in today’s fast-paced, ever-changing world, companies should not be looking for a sustained competitive advantage, but should instead be developing a portfolio of transient advantages that will bring them success moving forward. This is clearly a different approach to strategy, but what I find more interesting is the operational implications that she discusses. She identifies eight “major shifts” in the way companies must operate in order to thrive in a transient advantage world:
- Think about arenas, not industries
- Set broad themes, and then let people experiment.
- Adopt metrics that support entrepreneurial growth.
- Focus on experiences and solutions to problems.
- Build strong relationships and networks.
- Avoid brutal restructuring; learn healthy disengagement
- Get systematic about early-stage innovation
- Experiment, iterate, learn.
So strategically, you’re developing a portfolio of transient advantages. Strategy is about choice. Where are you going to compete, and how will you win. But when the advantages are transient, your internal capacity needs to be different. Experimenting, learning, relationship building, problem solving, decentralized. That’s HOW you do things. And how you do things is obviously about operations, but it is also about culture.
Take experimentation, for example. On the surface, I’m sure most of you agree that experimenting, iterating, and learning are all good things. Yes, let’s do that in our organization! But are your people truly willing to experiment, because it means they have to be comfortable with (a) being wrong and (b) sometimes not knowing what they are doing. Many cultures won’t tolerate that. And whether they admit it openly or not, those cultures actually hate experimentation. It’s a waste of time. It’s reinventing the wheel. It offends egos. We’re smart. We know what we’re doing.
So pay attention to your strategy. In today’s world of transient advantage, you may need to shift your strategy. That means you need to pay attention to operational capacity. As I’ve said before, you can’t have strategy conversations without talking about capacity. And that means you need to bring culture into the mix, otherwise you run the risk of having all those good ideas fail due to incompatibility with your culture.