Crossing strategy and operations divide

Leading the Way is a column written by PricewaterhouseCoopers professional staff. It appears in the Business section of the Bangkok Post twice each month. The column provides specialised advice to corporate decision-makers in Thailand on global and local business trends.

This article appeared in the March 17, 2009 issue of the Bangkok Post.

By Vilaiporn Taweelappontong

Anyone who has faced this situation knows that the gap between strategy and operations is a significant barrier to the pursuit of agility. Today's enterprise applications are great at managing and tracking new transactions, but not so good at managing business.

This poses a quandary for management as every investment in standardising systems for efficient operations comes at the cost of adaptability in the face of change. This creates an even bigger divide between a rapidly changing strategic planning process and the way a firm actually operates with each new application.

Information mediation then becomes the key to creating a process that makes an enduring and responsive connection between strategy and operations so changes in one are reflected in the other. PwC calls this "operationalising agility".

All companies have strategies, and they all have operations. Equally, all enterprises aspire to be agile. Many confuse agility with mere speed and then find themselves accelerating into a brick wall because they cannot change course when needed. Others are so intent on efficiency that they've become great at doing one thing cheaply and quickly, but they have no ability to adapt to market changes or seize new opportunities. Agility is elusive.

On the other hand, good strategies anticipate the future and pursue agility, but most companies' operations are standardised and designed to be consistent.

Strategy requires extreme flexibility in making choices and changes frequently, while operations take considerable time and expense to change. So there's a big divide between strategy and operations. This divide is a primary barrier to agility because changes in strategy are not reflected in operations quickly enough, and operations are not always aligned with strategic intent.

At the same time, most enterprises have invested in technologies such as enterprise resource planning (ERP), customer relationship management, supply chain management, and other enterprise applications to achieve operational efficiency. As the big divide suggests, what is lacking is an approach to connect the two to allow changes mandated by strategy to be brought into operations without the massive re-engineering efforts that frustrate companies and cause managers grief.

Today, most enterprises are set up to deal with change as something infrequent. Handling change as an episodic project-oriented activity, however, is often distracting and requires considerable time and expense, sometimes holding a change hostage.

As the pace of change accelerates in the broader business environment, enterprises need to address change as they do any other business process - as an operation, as measurable, as improvable over time, and as something subject to best practices with the possibility of creating market differentiation.

In an ideal world, disruptions to operational changes would be avoided by a service that would enable customers to achieve a high level of agility by seamlessly incorporating sudden changes into an overall supply chain process. This is achieved by facilitating operations among business partners, by aggregating data and information, and by providing shared visibility across supply chains.

The key to this process is the use of an information hub that the service would provide to enable information mediation - aggregating data from internal and external sources, making it available for analysis, and connecting the operational applications and business management applications.

Enterprises that can leverage existing and emerging applications to create the right balance between standardisation and flexibility, and then operationalise agility, will create sustainable market differentiation from their rivals. And there is clearly an opportunity for suppliers to help bridge these gaps; those that do so early will have an advantage with customers.

Equally, companies that work toward extending their capabilities of enterprise applications further into management of the business will start to bridge the gap between strategy and operations. This will allow enterprises to operationalise agility by creating an enduring and responsive connection between strategy and operations.

Vilaiporn Taweelappontong is a partner of the advisory services of PricewaterhouseCoopers in Mekong which comprises Thailand, Vietnam, Cambodia and Laos. We welcome your comments or questions at leadingtheway@th.pwc.com