Process of Operations Strategy Sustainable

Alignment

Overview

The process of achieving

sustainable alignment of market
requirements with operations
resources

The process of using

substitutes for strategy

The process of
implementing operations
strategy

What is sustainable Alignment?

Why is sustainability of alignment so important?
What is formulation process trying to achieve?
What are the practical challenges of formulating operations strategies?

What is sustainable alignment?

The process of continually reconciling operations

resources with market requirements to achieve a

degree of alignment or fit
The process of achieving the alignment between
parts of the firm responsible for marketing
activities and those responsible for resource
management activities is difficult, since
Uncertain nature of the market does not provide

the clear objectives to develop the operations

resources
Operations capabilities or constraints of
operations resources may not be always
predictable

What is sustainable alignment?

Since different parts of the firm are engaged in

pursuing different objectives there arises lack

of alignment between market requirements
and operations resources
Alignment means a balance between required
market performance and actual operations
performance
So when an alignment is achieved, customers
do not expect levels of operations performance
which the firm is unable to supply - IDEAL
SITUATION

What is sustainable alignment? A

conceptual
Nature andmodel
level of market requirements reflect customers needs or shaped by firms
marketing activity
Strength of brand or reputation
Degree of differentiation
Extent of market promises

Level and nature of firms operations resources

and process capabilities

Ability of operations to achieve competitive

objectives
Efficiency with which operations utilizes resources
Ability of firms resources to align with business
processes

Should operations resources align with the

market or vice versa?
Task of achieving alignment can be two ways
Firms can identify market requirements and

align operations resources to match them

Traditional top down hierarchy of strategies

Operations to analyze resources and find

market opportunities that align with the

resources
Alignment is both static and dynamic

How well is the resources aligned to market needs

What changes in resources are required to align

with changing market needs

Fit means that the operations resources and processes

are aligned with the requirements of its markets.

Market
requirements

Fit can also mean that market requirements are moved

to exploit operations resource capabilities

Li

ne

t
fi
f

Operations resource capability

Fit operations resources to

market requirements
Market
segmentation

Operations
capabilities

Operations
strategy
decision
areas

Operations
performance
objectives

Market
positioning

Competitor
activity

to
enhance
core
capabilities

Make
strategic
operations
decisions

State market
requirements
in terms of
operations
performance
objectives

Define
competitive
position

Understand
markets

Fit market positioning to

operations resources
capabilities
Tangible and
intangible
resources

Operations
capabilities

Operations
strategy
decision
areas

Operations
Performance

Potential
market
positioning

Operations
processes
Understand
resources and
processes

Identify
core
capabilitie
s

Make
appropriate
strategic
operations
decisions

Define
market
potential of
operations
performance

Determine
competitive
position

Achieving alignment at different levels

Fit between market requirements and

operations capabilities

If the requirements placed by the market on

operations is not demanding, then the level of

operations capabilities is not high.
More demanding the market is, then level of
operations capabilities is high

Achieving alignment is a necessity, not

sufficient condition for successful operations

strategy
Firms would achieve alignment at a level that
implies some degree of long term competitive
success (Eg. Philips plastic tape deck
mechanism)

Market requirements

In operations strategy fit is the alignment

between market requirements and operations
capability

X1

Li

ne

t
fi
f

Alignmen
t at a
high level
A
Alignme
nt at a
low level
Y

Y1

Level of operations resource

capability

Achieving alignment at different levels

Refer the graph showing the alignment

between market and operations capabilities

Firms would assume that Point B is more
desirable than Point A, since aligning at a
higher level signifies a financially successful
position
High levels of market performance, achieved
through high level of operations capability will
be more difficult for the competitors to match

Excessively tight fit can increase the risks of

misalignment between market requirements and
operations resource capability

Market requirements

Tight fit

Li

ne

t
fi
f

Movement in market
requirements and
operations resources
produces misalignment

Level of operations resource

capability

Tight alignment and loose alignment

Tight alignment
Well defined statement of market requirements

and a narrow set of operations capabilities

Markets and operations resource capabilities

may change over time

Markets are dynamic and exhibit unexpected

changes
Operations resource capabilities can show
unexpected movements, may be at a slower pace

If the alignment between market

requirements and operations capabilities is

very narrow, there can be always a possibility
that the two can get misaligned

Tight alignment and loose alignment

Strategies should be formed repeatedly over

time to address changes in both market

requirements and operations resources

Many big companies have gone into oblivion as

they did not review their operations strategies

time and again (Eg. Kodak)
These companies might have aligned market and
operations capabilities at one point of time but
failed to realign as both the market and
operations capabilities changed
A broader (loose) set of capabilities and market
relationships can provide some stability
Example could be Dell, Toyota

Excessively tight fit can increase the risks of

misalignment between market requirements and
operations resource capability

Loose fit

Market requirements

Li

ne

t
fi
f

Looser fit between

market requirements and
operations resources
preserves alignment

Level of operations resource

capability

Static and dynamic sustainability

Static approach to sustainability means to develop

resources which are considered valuable

Scarce, difficult to move, difficult to copy, or difficult to

find substitute for (eg. INTEL chips)

Because they are difficult to replicate such resources act
to sustain competitive advantage
Overall performance of a firm depends on how its
strategy takes into account the structure of the industry
it is in

Dynamic approach to sustainability

Even in isolated markets, customer requirements evolve

and along with that operations capabilities need to

evolve
Operations can raise the barrier through innovation and
change to maintain sustainability (Eg. Philips plastic tape
deck mechanism)

Learning, appropriation and path

dependency

For any operation to achieve dynamic

sustainability
Operations strategy must encourage
learning to make sure that operations
knowledge is carried forward with time
Operations strategy must ensure that the
firm appropriates (captures the value of) the
competitive benefits that are derived from
any innovation
Operations strategy must take into account
that innovations are influenced by what has
happened before

Organizational Learning
In uncertain environments it may be better for

an organization to adapt as circumstance change

More uncertain the environment, the more an
organization needs to be flexible and develop its
ability to learn from events.
Development of insights and knowledge through

learning
Establishing connections between past actions, the
results of such action and future intentions

How does an operations strategy encourage,

facilitate, exploit learning in order to develop

strategic sustainability

Single and double loop learning

Single loop learning occurs when there is a

repetitive association between input and output

factors
Eg. Statistical process control output from this can be

used to control supplier quality, manufacturing

consistency, training

Double loop learning questions fundamental

objectives and market positions and culture of

the organization.
Challenges existing operating assumptions and remain

open to changes in the competitive environment

An operation needs both single loop learning to

create consistency and stability and double loop

learning develop internal and external objectives

Single loop learning in operations

Examine the
performance of
operations
processes

Operations
innovation

Compare this
performance against
objectives

Develop new
insights and
capabilities

The potential limitations of singleloop learning

Compare this
performance

Reduce
performance of
operations
processes

Operations
innovation less
easy

Performance
objectives less
appropriate

Insights and
capabilities less
useful

Shifts in technology,
processes or markets,
leading to improved
competitor performance

Double-loop learning questions the

appropriateness of operations
performance

Examine the
performance of
operations
processes

Compare this
performance against
objectives

Question the
relevance of
objectives

Develop new (more

relevant objectives)
Operations
innovation

Develop new
insights and
capabilities

Prof Terry Hill framework of operations

strategyStep
formulation
Step 1
Step 2
3
Step 4
Step 5
How do
Operations
products or
strategy
Infrastructu
Process
services win
re
choice
orders?

Product/servi Price
Process

Growth
ce
technology
Functional
Quality
markets and
support

Profit
segments
Trade-offs

ROI

Delivery
Range
embodied in Operations
speed
process
planning
Other

Mix
and control
financial
Delivery
Role of
systems
measures
Volumes
dependability
inventory
Work
Standardisati Product/servi Capacity, size,
structuring
on
or
ce
range
timing,
customisation

Product/servi location
Payment
Innovation
ce
systems
design
Leader or

follower
Brand image
Organisational
Technical
structure
service
Corporate
objective
s

Marketing
strategy

The Platts-Gregory procedure

Ken Platts and Mike Gregory incorporates a form of

prioritization based upon an assessment of relative

competitive performance
Stage 1 involves developing an understanding of the

market position of the organization it seeks to identify

the factors that are required by the market and then
compares these to a level of achieved performance
Stage 2 seeks to identify the capabilities of the operation.
Decision categories are provided to help managers
classify current operations practice and then link these
practices to the priorities identified in stage
1.organisation
Stage 3 encourages managers to review different options
they have for improvement and developing a new
operations strategy against the backdrop of market
criteria

Prioritisation
The PlattsGregory procedurebased
upon an
Opportunities
and threats

What the market

wants?
Features
Quality
Delivery
Flexibility
Price
How the
operations
performs
Features
Quality
Delivery
Flexibility
Price
Understanding of the
market position of
the organisation

The existing
operation
Facilities
Capacity
Span of process
Processes
Human resources
Quality
Control policies
Suppliers
New products

Identify the
capabilities of the
organisation

assessment of
relative
competitive
performance

What do we need
to do to improve
the revised
operations
strategy?
Developing a new
operations strategy
against the backdrop
of market criteria