Module 5
Module 5
▪ Standard cycle – Products and services in this class exploit less specialised resources and, therefore, face higher levels
of resource imitation pressure
▪ Successful companies tend to emphasise discipline (control and coordination) in operations, and products tend to be
standardised for production at high volumes
▪ Examples: Automobiles, consumer electronics.
▪ Operations strategy: Emphasize efficiency, cost reduction, and product differentiation.
▪ Fast cycle – Products and services in this class face the highest levels of resource imitation pressure
▪ These products do not require complex operations to support them and are increasingly outsourced to low-cost,
focused producers. To maintain sustainable alignment, these firms must master competitive routines associated with
innovation and time to market.
▪ Examples: Fashion, technology.
▪ Operations strategy: Prioritize speed, flexibility, and innovation.
TIME AND TIMING (CONTD.)
▪ The implications for management could seem counter-intuitive
for operations managers who are used to emphasising speed and
efficiency as key strategic goals. They include the following:
▪ Determining the correct speed for innovation: Too much innovation can
distract the operation and its customers. The correct speed of innovation
should depend upon the sustainability of the firm’s resources.
▪ Resource cycles should influence diversification: The lack of
understanding and capabilities in dealing with faster
resource/requirement dynamics leaves them with over-engineered
products, missed development lead times, exorbitant production costs,
etc.
▪ Look out for cycle-time shifts: Not all changes necessarily drive markets
towards higher imitation rates. Regardless of the direction of change, such
shifts can be difficult to adjust to and, therefore, need to be actively sought
out and analysed.
STRATEGIC SUSTAINABILITY
▪ Two basic models for assuring sustainability:
1. The use of ‘static’ mechanisms that defend a given position
2. The use of ‘dynamic’ mechanisms that encourage innovation and change
▪ Specific structural issues that can increase the potential level of inertia:
▪ Operations’ resource profile: Once an investment has been made in tangible
or intangible assets, this inevitably influences subsequent decision-making.
▪ Investment bias: Operations will tend to invest further in those
resource/requirement intersections that have proved successful.
▪ History: Organisations become constrained by their own history.
▪ Organisational structures/political forces: Often overlooked in rational
discussions of operations management, political forces have an enormous
influence.
HOW DO WE KNOW WHEN THE FORMULATION PROCESS IS COMPLETE?
The 4 Cs
▪ Exploring what it means for an
operations strategy to be
comprehensive
▪ Highlighting which
resource/requirement intersections are
the most critical for the broader
financial and competitive priorities of
the organisation
Source: Operations Strategy
(Nigel Slack, Michael Lewis)
HOW DO WE KNOW WHEN THE FORMULATION PROCESS IS COMPLETE?
Source:
https://www.intrafocus.com/2016/06/
balanced-scorecard-example/
EXAMPLE OF BALANCED SCORECARD
Source:
https://www.intrafocus.com/2016/06/
balanced-scorecard-example/
MONITORING AND CONTROL AS AN ATTEMPT TO CONTROL RISK
▪ The basic motivation for considering risk in the monitoring and
control phase of the operations strategy process is simply to ‘be
prepared’ for the events that could cause the implementation to
deviate from its intended course.
▪ Six aspects of risk that are particularly relevant to operations strategy:
1. The dynamics of monitoring and control
2. The risk of market and operations performance becoming out of
balance
3. The distinction between pure and speculative risk
4. Controlling risk through prevention, mitigation and recovery
5. Adjustment cost risk
6. Intervention risk
DYNAMICS OF MONITORING AND CONTROL
▪ As implementation proceeds and monitoring indicates its
progress, the implementation trajectory may change.
Competitive activity or more general environmental change
could affect the level of performance required, or the change may
need to be more fundamental with changes in strategy direction
and extent.
▪ How easily an operation finds a change of direction will depend
on its agility, which, in turn, will depend partly on how tightly its
operations resources are aligned with its market requirements.
EXCESSIVELY TIGHT ‘FIT’ CAN INCREASE THE RISKS OF MISALIGNMENT BETWEEN
MARKET REQUIREMENTS AND OPERATIONS RESOURCES CAPABILITY
▪ Decisions are needed as to whether to intervene or not and how to intervene. Intervention
means doing something to bring the implementation closer to its objectives and learning from
the intervention so that future interventions will be better targeted.
▪ Type I and type II errors in control: Type I and type II errors are commonly used in
operational control and useful in understanding strategic control. It concerns the possibility of
deciding whether to intervene wrong, although one can apply the idea to any decision.
▪ Type I error is when an intervention is made to the implementation when it was not
necessary;
▪ Type II error is when there is a failure to intervene in an implementation even though an
intervention is necessary.
Single-loop learning
Double-loop learning
questions the
appropriateness of
operations
performance