Operations Strategy &

Capability
Rahul Pandey
rahul.pandey@igsalabs.com
When does a firm have strategy? (Porter)
Ans:
1. Strategy is How we are unique, What is the value we are creating ,How we are in advantage, How we sustain that advantage overtime.
2. What is the advantage we will have at the end if we take steps cumulatively over time.
3.Taking steps are not strategy.

(Note:
A. Many companies themselves fixated on a particular action that they want their organization to take and that becomes strategy and often of course often drives the company
literally off the cliff because they kind of don’t understand why they are doing it and when they stop doing

B. Good Strategy with poor execution will not succeed.

C. Good strategy , good execution will give superior results.

L ink
W N
• It has a clear strategic positioning in its markets P- DO s)
TO Focu
,
• The strategic positioning is reflected in the design/rules of (Fit
operating systems (and systems in other functional areas) d
ng e
p ro
u lti- ns
M atio
Moreover, the strategy is difficult to imitate if .. p e r tio ns
o v e n )
r
• There are multiple such operating systems implemented in inte grated
various domains (of operations), stages, supply chain partners I n te
(
How do you present yourself to customers and sustain competitive
advantage?
Or, how does a firm survive, compete, grow?

By being better!
Improve in the desired direction more than others, that provides better value to customers
(accumulated operations improvements on specific metrics)

By being different!
Design certain business processes or products differently, that provides unique value to customers
(redesigning operations or supply chain or service delivery could be a part of this)
How does a firm survive, compete, grow?
(Christensen)
Modes of innovations/improvements:

• Efficiency Innovations Do more with less

• Sustaining Innovating
Offer better products/services to best customers

• Market Creating (Disruptive) Innovations

With new business models, offer more affordable products/services
to lower ends of markets or compete with non-consumption
What’s core competence? (Prahalad)
n a l)
• Skill or knowledge sets, not products or functions e ptio
( exc
• Flexible, long-term platforms, capable of adaptation h e rs
n gt
n o th ers
• Limited in number Stre er tha ustom )
c e
• Unique sources of leverage in value chain Bett ed by tinctiv
a lu ( di s ate
V e i t
• Areas where the company can dominate n i qu to im
U cult
• Elements important to customers in the long run Diffi
• Embedded in the organization’s systems
 nk
Types of Operations Choices O M -U
L
o
i
P l em
b
O T T g , Pr
tion)
B r n in o va
a n
(Le ing, In
Structural Infrastructural solv
Technology/Investment at the People/skills at the centre;
centre; People adapt Technology/investment supports
Main mode: buy/install solutions Main mode: learn/build skills
Capacity Workforce/People
Facilities Quality
Technology Work Control
Sourcing Organization
Some examples ..
• Two approaches to capacity planning
• ACC vs. DJC
• Conventional auto firm vs. Toyota
Some examples ..
• Push & Pull systems of production & procurement:
• Push with ERP/MRP (majority firms)
• Pull with Location (M&M)
• Push with ERP/MRP + Pull with Location/Kanban + Pull with low setup
resources & online QC/defect prevention (Toyota, Dell, DJC)

• ERP
• IT/EDP driven (Godrej & Boyce)
• User driven (M&M)
• Part of integrated push-pull system (Dell)
Some examples ..
• Daewoo shipbuilding
• Conventional, sequential way
• New way made possible by high accuracy welding

• Chapparal steel

• Seven Eleven: a retailer model of serving customers

• Distribution network; Integrated IT system; Coordination rules
• Human knowledge

• Amazon: another retailer & marketplace model of serving customers

• W L Gore
• Flat, lattice-like organization structure (accountability to fellow members)
• Temporary, small, multidisciplinary teams (organized around solving problems or new product/business opportunities)
• Associates (rather than employees); Leaders (rather than bosses)
• Freedom, fairness, self-commitment, waterline
• Hands-on product innovation & prototyping