Strategic Positioning and Operational Effectiveness p7 u8

Operational Effectiveness is not enough, on its own, I posted about this some months ago.

However, good strategy is not enough on its own either. The two must be combined in implementation.

The Red Cross (a voluntary organisation) does not use the language of competition internally, and does not necessarily "compete" with other organisations to serve "customers", however it still takes part in a competitive marketplace for the resources it needs. Example u8p8

If an organisation like the red cross is inefficient, this will be reflected in the percentage of its income spent on administration costs. This can affect people's perception of the organisation, and as an organisation relying on public goodwill, this can affect income. A reduction in income can directly affect the organisation's ability to carry out its strategy. This is one example of how strategy depends on operational effectiveness. But operational effectiveness can also depend on strategy. Your strategy can drive or even define how you tackle operational effectiveness. If you find your organisation becoming inefficient, a new strategy can be implemented to change this. Control systems, part of your strategy, can help implement and measure operational effectiveness, and models such as Levers of Control (Simon) can be useful here.

Porter says that your strategy allows you to have "a particular set of activities to deliver a unique mix of value". Continuous improvement of operational effectiveness alone is not the basis of advantage. Your competitiors can copy that. Porter suggests that one reason that Sony and Matsushita (and I guess, Japanese car firms) are becoming less competitive is that their success was based predominantly on operational efficiency (quality, just-in-time, lean manufacturing etc) and their competitors have copied them and their lead in some sectors has been almost eradicated. Porter suggests that they now have to learn strategy.

In the 1980s the market positioning view of strategy was dominant, however in the 1990s the resource-based view took over. They are alternative views, although the reasoning today is that they should not be considered mutually exclusive because both are essential to understanding strategy.

Similarly, strategy and operational effectiveness are different and distinct, but both are key to an organisation's survival.

Certainly, at $EMPLOYER, there is currently a shift in $DEPARTMENT towards more operational effectiveness. "Lean" methods are being introduced, clean desk policy, orderly offices, etc (Look on Wikipedia for 5S). However this shift may well be due to a confusion of the difference between strategic positioning and operational efficiency.