The Processes That Will Kill Your Strategy
You must think of them as well
Some days ago, I went to a local sporting goods store to buy swimming trunks. The store was part of a large international chain famous for its reasonable prices and acceptable quality of products.
When I entered the store, I spotted a big billboard with large words in blue and orange. It offered me and other visitors to take an orange shopping cart if I needed assistance and a blue one if I preferred to be left alone.
There was a cart collection area right under the billboard.
I thought it was a clever idea. My wife likes to talk to an assistant and get help while choosing the goods. So, she'd opted for the orange cart. But gloomy, unsociable types like me prefer to wander between the shelves in silence and solitude, so the blue cart would be my choice.
I mentally applauded the marketers of the chain. Great job, I thought.
And only then did I notice that there were only blue carts under the billboard. The orange ones were missing for unknown reasons.
Strategy and value chain
Some time ago, I wrote an article about Barns & Nobles, the biggest bookstore chain in the USA. The company had been losing its market share and customers until the new CEO, James Daunt, changed the concept. He allowed store managers to adjust the assortment of their stores at their discretion. Thus, he managed to reverse the negative trend, and the company returned to growth.
But what did Daunt change? He changed the value chain.
Any company is a set of processes that are supposed to create value for customers.
Some do it directly, for instance, product development, sales, or customer service.
Some do it indirectly, for example, strategic management, procurement, or corporate culture development.
Any process, with few exceptions, must contribute to customer value, this way or another.
Imagine you became a CEO of a company that, as Barns & Nobles did some time ago, loses its market position. You and your top executives devise and formulate a new strategy. You believe it will work.
Why do you believe it? You can do it only if your new strategy aims to create more customer value. But to do so, you need to change your value chain.
Or in other words, you need to change some of the business processes.
How deep is a strategy?
Some business gurus and famous strategists believe that strategy is a concept, not a playbook. For instance, Roger Martin thinks that strategy is about answering two questions:
Where to play?
How to win?
He is not tired of repeating that all the rest is essential, but it isn't a strategy.
It is hard to argue with him because there is no generally accepted definition of strategy, so everyone can have their own opinion on the topic and insist they are right.
But I am afraid that the guys from that sporting goods store chain also found the answers only for two questions – where to play and how to win. And, by the way, I like their idea about how to win. Their experiments with blue and orange carts aimed to improve customer experience, i.e., to create more value for shoppers.
But they didn't change the process, and all they got were many pictures online taken by sneering shoppers.
So, by separating "operations management" from " strategy," we risk losing sight of processes. But processes are not part of "operations management." They create value for customers, so they are not less crucial than other aspects of strategic work.
Stratelogic is a concept in which strategy is the set of answers to 22 simple questions. And processes are one of them. I will tell you more about Stratelogic in the following newsletter. Stay tuned.