Managing for Organizational Success through Strategic and Operational Engines' Visualization
Organizations rely on different strategies to achieve their business goals and survive in today's competitive business environment. These strategies are planned for the long term and carry a broad range of activities. Generally, an organization develops three (3) different types of strategies i.e., Corporate, Business/Competitive and Operations strategy. These strategy types form a layered hierarchy. Strategy is an intangible concept, and its not visible to the organization or those who would intervene to make it work as intended. Strategy visualization enables people (managers and workers) in an organization to better visualize the organization's strategy in its various manifestations and provides a framework for creating a consistent, shared understanding if the challenges an organization faces and enables generation of possible solutions to those challenges.
Visualizing refers to a person's ability to create "pictures" - mental models - in their heads based on text we read, words we hear, or activities we are about to perform. Strategy Visualization can foster better strategic decisions, shared understanding of the purpose, positioning and direction of the company; enable better coordination in enacting policies that drive the right organizational behavior; and pushing down decisions to ensure timely and successful execution. Strategy visualization provides the methods to support managers in envisioning their organization's strategy through visualization of the strategic engine and operations engine.
Strategic thinking is informed by systems thinking which enables us to conceptualize the dynamics of an organization as a system, in terms of the coordinated interplay of two engines - strategic engine and operations engine. The strategic engine and operations engine are devices that help managers visualize strategy driven organizational change through the dimensions of range of decisions - strategic, tactical and operational. This model enables decisions to be defined in terms of their intended outcomes/results as goals models which can be visualized. Visualization can help improve management ability to successfully manage the development and execution of value creating strategy.
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A strategy can be made “visible” through visualization of the strategy's structure and dynamics as represented in the strategic engine. We can visualize organization strategy in terms of the following:
Strategic engine visualization allows us to visualize strategy as a system of decisions - a layered hierarchical set of decisions across corporate business and operations strategy levels. Organizational strategy can be made visible/real by improving the shared understanding of the idea through visualization of the strategy and implementation in terms of the strategic engine that underlies the organization's strategic management process and the operational engine that underlies the operations management process.
Visualizing Operational Performance
Operational Engine is an abstraction of the system of operations management decisions about utilizing the operations systems to efficiently manage the organization's operational value chain. The operations/operational engine is comprised of the system of processes that produce goods and services delivered to customers. Operational engine is comprised of a system of decisions related to the day-to-day activities in the organization involving all input-transformation-output processes. Operational decisions are based on facts and data regarding the events and do not require much of business judgment. Operational decisions allow the organization to efficiently manage the current value chain of activities that drive the creation and delivery of customer value, and achievement of operational objectives.
The Operations Engine supports operations managers' decisions in efficiently managing the day-to-day activities of the organization across functional areas to achieve performance efficiency in creating value at reasonable costs. Operational management decisions are the day-to-day decisions that shape the creation and delivery of customer value.
The Operational Engine enables an organization to capture and integrate operational events and data from all functional areas, in the value chain, to inform operational management decisions about customers, suppliers, employees, and products. The value chain activities include production and supply chain activities as well as business function areas such as marketing, finance, sales, HR, and customer service.
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Strategic management process is the means by which strategic decisions are made with respect to strategy formulation, implementation and execution, and evaluation. Operational management process is the means by which operational decisions are made with respect to effectiveness and efficiency in producing goods and services that customers want.
From a systems thinking perspective, strategic management decisions and operational management decisions can be represented through two engines, namely: strategic engine and operational engine respectively. Both engines are necessary and their parallel and coordinated functioning is critical to organization success.
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Visualizing refers to a person's ability to create "pictures" - mental models - in their heads based on text we read, words we hear, or activities we are about to perform. Strategy Visualization can foster better strategic decisions, shared understanding of the purpose, positioning and direction of the company; enable better coordination in enacting policies that drive the right organizational behavior; and pushing down decisions to ensure timely and successful execution. Strategy visualization provides the methods to support managers in envisioning their organization's strategy through visualization of the strategic engine and operations engine.
Strategic thinking is informed by systems thinking which enables us to conceptualize the dynamics of an organization as a system, in terms of the coordinated interplay of two engines - strategic engine and operations engine. The strategic engine and operations engine are devices that help managers visualize strategy driven organizational change through the dimensions of range of decisions - strategic, tactical and operational. This model enables decisions to be defined in terms of their intended outcomes/results as goals models which can be visualized. Visualization can help improve management ability to successfully manage the development and execution of value creating strategy.
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- The strategic engine visualization helps make the abstract concept of the organization's business strategy real/concrete for members - managers and workers - of the organization. It involves creating intentional and logical goals model of the strategic engine's layered hierarchy. The strategy concept at each layer is the means of achieving the results defined by the strategic goals for that layer e.g., corporate strategy, business strategy, and functional strategy respectively. The strategic goals that correspond to the various levels/layers at which strategy concept exists in the organization i.e., corporate, business, and functional levels; and they define expected outcomes or results the organization wants to achieve to better meet the organization's mission. These goals are assigned to organization positions with the decision rights within functional structures resulting from the operations strategy infrastructure design.
A strategy can be made “visible” through visualization of the strategy's structure and dynamics as represented in the strategic engine. We can visualize organization strategy in terms of the following:
- The layered hierarchy structure of the business organization
- The operating structure/model of the organization that supports the implementation and execution of the strategy
- Outcome goals and the progress towards achieving them defined by key success indicators/mikestines.
- visualization of the gaps in the organization's strategic capability/capacity as defined by the Operating Model, and the initiatives required to strengthen its organizational capabilities and resources enabling it to close the gap and to better perform its strategic management functions.
Strategic engine visualization allows us to visualize strategy as a system of decisions - a layered hierarchical set of decisions across corporate business and operations strategy levels. Organizational strategy can be made visible/real by improving the shared understanding of the idea through visualization of the strategy and implementation in terms of the strategic engine that underlies the organization's strategic management process and the operational engine that underlies the operations management process.
Visualizing Operational Performance
Operational Engine is an abstraction of the system of operations management decisions about utilizing the operations systems to efficiently manage the organization's operational value chain. The operations/operational engine is comprised of the system of processes that produce goods and services delivered to customers. Operational engine is comprised of a system of decisions related to the day-to-day activities in the organization involving all input-transformation-output processes. Operational decisions are based on facts and data regarding the events and do not require much of business judgment. Operational decisions allow the organization to efficiently manage the current value chain of activities that drive the creation and delivery of customer value, and achievement of operational objectives.
The Operations Engine supports operations managers' decisions in efficiently managing the day-to-day activities of the organization across functional areas to achieve performance efficiency in creating value at reasonable costs. Operational management decisions are the day-to-day decisions that shape the creation and delivery of customer value.
The Operational Engine enables an organization to capture and integrate operational events and data from all functional areas, in the value chain, to inform operational management decisions about customers, suppliers, employees, and products. The value chain activities include production and supply chain activities as well as business function areas such as marketing, finance, sales, HR, and customer service.
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Strategic management process is the means by which strategic decisions are made with respect to strategy formulation, implementation and execution, and evaluation. Operational management process is the means by which operational decisions are made with respect to effectiveness and efficiency in producing goods and services that customers want.
From a systems thinking perspective, strategic management decisions and operational management decisions can be represented through two engines, namely: strategic engine and operational engine respectively. Both engines are necessary and their parallel and coordinated functioning is critical to organization success.
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- The strategic engine is an abstraction of the strategy process of the strategic management process. Strategic management views the organization as an open social system, highly dependent on outside resources such as suppliers and consumers, and influenced by external environment factors. Strategic management process is the means through which decisions are made, and must be designed to adapt to these influences.
- The Operational Engine is an abstraction of the core business processes or operational processes. Operational processes are the key activities or cluster of activities which must be performed in an exemplary manner to ensure a firm's continued competitiveness because it adds primary value to the firm's goods and services. Operations is the business function that transforms inputs into outputs - the goods or services offered to customers.
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Strategic Engine Model
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Operational Engine Model
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Strategic Engine
The Strategic Engine is an abstraction of the concept of strategy as a system of decisions organized around a layered model comprising a 3-level hierarchy of corporate strategy, business strategy, and operations strategy with the rest of the other functional strategies as supporting tools that exist at all levels of the hierarchy. A strategic engine is company specific, customized to the company's own situation and performance objectives. The Strategic Engine is a system of decisions that determine how the organization should evolve in order to achieve sustainable competitive advantage leading to long-term success.
The strategic engine relates the three (3) levels of the strategy hierarchy through a specific dual integration, built through a vertical orientation: top-down and bottom-up approach. The success of both approaches to generate advantage for the organization is reinforced by functional strategies such as; marketing, finance, IT, HR, sales, etc., that appear simultaneously at all three levels of the strategy hierarchy. The whole engine performance is synchronized and sustained through the functional strategies that provide resources and capabilities needed to reinforce performance at all three (3) strategy hierarchy levels. The strategic engine will not generate any competitive advantage for the company if it loses reinforcement of proper resources and capabilities from functional strategies.
Strategic Engine Goals Model
The Strategic Engine component model is a 3-level hierarchy goals model of corporate, business and operations strategy layers of organization strategy with reinforcing relationships to functional strategies at each level in the hierarchy. The organization strategy goals model is an intentional goals model of the intended/deliberate corporate, business and operations strategy layers The goals model integrates the strategy hierarchy of the different levels of corporate, business and operations strategy levels into a coherent organization system model that aligns with the organization system purpose - defined by mission goals.
The three (3) levels of strategy hierarchy are interrelated through a specific dual integration, built through a vertical orientation - top-down and bottom-up interactions. Top-down implies Operations strategy has a vertical relationship with corporate and business strategy, that might come down from the levels above. Bottom-up implies operation strategy comes from within operations to improve resources and capabilities, and informs business and corporate strategy decisions. All the levels in the hierarchy have horizontal relationships with functional strategy. The unique combination of top-down (CS and BS) with bottom-up (OS and BS) approaches ensures the right fit of organization strategy levels.
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The strategic engine model is useful for managers seeking to safeguard the competitive advantage of their companies. Most managers in organizations have difficulty developing valid strategy statements without the determination process degenerating into solemn recording of platitudes, and trappings of strategy which is useless for either clarification of the direction or achievement of consensus among managers.
Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. Sustainable competitive advantage is what makes an organization's products or services more desirable to customers than that of any of its rivals. From a system thinking perspective competitive advantage is an emergent property of the organization viewed as a system; and it's derived from the combination of corporate level comparative advantage, business level differential advantage, and operations level comparative advantage (i.e., economies of scale).
Operations Strategy Visualization
Businesses typically have a mix of production of goods and services that collectively define the value proposition offered to customers. Decisions about the impact of product-mix on production capacity and performance are usually supported by analytical methods such as Linear Programming (LP). These decisions are usually made so that the market demand is met and the firm profit is maximized. However, the complexity, and the dynamic stochastic nature of real-world production and service delivery systems often lead to goods and service production effective capacity levels that are different from those determined by analytical methods. Analytical methods also have problems coping with the dynamic changes in the product-mix which usually require enhancing system parameters and/or reconfiguration of the operations systems.
The Strategic Engine is an abstraction of the concept of strategy as a system of decisions organized around a layered model comprising a 3-level hierarchy of corporate strategy, business strategy, and operations strategy with the rest of the other functional strategies as supporting tools that exist at all levels of the hierarchy. A strategic engine is company specific, customized to the company's own situation and performance objectives. The Strategic Engine is a system of decisions that determine how the organization should evolve in order to achieve sustainable competitive advantage leading to long-term success.
The strategic engine relates the three (3) levels of the strategy hierarchy through a specific dual integration, built through a vertical orientation: top-down and bottom-up approach. The success of both approaches to generate advantage for the organization is reinforced by functional strategies such as; marketing, finance, IT, HR, sales, etc., that appear simultaneously at all three levels of the strategy hierarchy. The whole engine performance is synchronized and sustained through the functional strategies that provide resources and capabilities needed to reinforce performance at all three (3) strategy hierarchy levels. The strategic engine will not generate any competitive advantage for the company if it loses reinforcement of proper resources and capabilities from functional strategies.
Strategic Engine Goals Model
The Strategic Engine component model is a 3-level hierarchy goals model of corporate, business and operations strategy layers of organization strategy with reinforcing relationships to functional strategies at each level in the hierarchy. The organization strategy goals model is an intentional goals model of the intended/deliberate corporate, business and operations strategy layers The goals model integrates the strategy hierarchy of the different levels of corporate, business and operations strategy levels into a coherent organization system model that aligns with the organization system purpose - defined by mission goals.
- Corporate Strategy (CS) - Corporate strategy revolves around the objectives of the organization, core competencies, and gaining competitive advantage in terms of products and/or services offered, target markets and customer segmentation. It involves choices about the scope of the organization's products, the vertical and geographic coverage, and identifies investment priorities for the businesses based on current market positions.
- Business Strategy (BS) - Business strategy is concerned with creating competitive advantage through differentiation or cost leadership in specific market and customer segments. The point of interest is on how the organization competes within a specific industry/market as constrained by competitive priorities (established through the SWOT analysis). It involves decisions and choices regarding competitors, and the nature of competition and competitive advantage. And formulating responses to changes in the industry, crafting competitive moves and market approaches leading to sustainable competitive advantage by building valuable, rare and hard to copy competencies and capabilities.
- Operations Strategy (OS) - Operations strategy is the system of decisions that are aimed at shaping both the long-term capabilities of operations (irrespective of their type), and their contribution to overall strategy achievement. It consists of a series of decisions that organizations make in order to implement competitive business strategies. Operations strategy supports in linking operational-level decisions, both short-term and long-term, to corporate strategy.
The three (3) levels of strategy hierarchy are interrelated through a specific dual integration, built through a vertical orientation - top-down and bottom-up interactions. Top-down implies Operations strategy has a vertical relationship with corporate and business strategy, that might come down from the levels above. Bottom-up implies operation strategy comes from within operations to improve resources and capabilities, and informs business and corporate strategy decisions. All the levels in the hierarchy have horizontal relationships with functional strategy. The unique combination of top-down (CS and BS) with bottom-up (OS and BS) approaches ensures the right fit of organization strategy levels.
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- Top-down Direction- Top-down implies Operations strategy has a vertical relationship with corporate and business strategy, that might come down from the three levels. The whole process begins with establishing Corporate Strategy (CS) goals. Posing questions about business portfolios and investment decisions, such as "Where?", "How much?", and "What kind of?". Then it follows the business strategy (BS), identifying how to compete in specific markets and industries, trying to find coherent answer to a generic question "How?", and with which generic strategy to compete. And finally the operations strategy (OS) comes, that should provide in with that should provide the right answer to a specific question "How?", ("Which way to compete?"), to deliver the highest result from the sum of of the basic performance objectives - speed, quality, dependability and flexibility ar appropriate cost level.
- Bottom-up Direction - Bottom-up implies operation strategy comes from within operations to improve resources and capabilities. Operations strategy tries to improve these objectives, supports and reinforces the final outcome.of Business Strategy (BS) to achieve sustainable competitive advantage that in turn, contributes to achieve superior economic returns on a corporate level. Based on results of business strategy (BS), executive managers decide on entering/leaving markets, enlarging/shortening the value chains, or pursuing business diversification. Once the dyadic flow of information is completed, further refinement of the whole process might start again, based on the outcome of this process.
The strategic engine model is useful for managers seeking to safeguard the competitive advantage of their companies. Most managers in organizations have difficulty developing valid strategy statements without the determination process degenerating into solemn recording of platitudes, and trappings of strategy which is useless for either clarification of the direction or achievement of consensus among managers.
Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. Sustainable competitive advantage is what makes an organization's products or services more desirable to customers than that of any of its rivals. From a system thinking perspective competitive advantage is an emergent property of the organization viewed as a system; and it's derived from the combination of corporate level comparative advantage, business level differential advantage, and operations level comparative advantage (i.e., economies of scale).
Operations Strategy Visualization
Businesses typically have a mix of production of goods and services that collectively define the value proposition offered to customers. Decisions about the impact of product-mix on production capacity and performance are usually supported by analytical methods such as Linear Programming (LP). These decisions are usually made so that the market demand is met and the firm profit is maximized. However, the complexity, and the dynamic stochastic nature of real-world production and service delivery systems often lead to goods and service production effective capacity levels that are different from those determined by analytical methods. Analytical methods also have problems coping with the dynamic changes in the product-mix which usually require enhancing system parameters and/or reconfiguration of the operations systems.
Operational Engine
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Business operations constitute many processes including materials acquisition and inventory management, manufacturing/production, product delivery, service delivery, etc. Capacity utilization impacts business performance. Capacity analytics helps to determine whether the business is running at optimum capacity utilization. It can help spot if the resources are being under utilized or if the employees are working over-capacity. It can also help the business to determine how much and when to increase capacity.
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Operations Management
Operational Management involves administrative and operational decisions focused on operational control of the organization's capacity to efficiently carry out the tasks set forth by strategic and middle management decisions and decision-makers. Operational management takes place within the context of broad policies and objectives set out by strategic decision-making. Operational management focuses on how to best use the organizations production resources, capabilities and competencies to create and deliver value to customers.
Operational control decisions involve determining which organization units will carry out the tasks, establishing criteria for completion, resource utilization, and evaluating outputs. Operational decisions, unlike strategic decisions, are repetitive, routine and involve definite procedure for handling so they do not have to be treated each time as if they were new.
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Operations management focuses on the control of the means - processes and resources - by which organizations create and deliver value. It involves structured decision-making, concerned with how efficiently and effectively resources are utilized and how well operations units are performing.
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Operations Management involves administrative and strategic decision-making processes focused on Operations Strategy design, Operations Systems design, operations process design and operations control systems design.
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Business operations constitute many processes including materials acquisition and inventory management, manufacturing/production, product delivery, service delivery, etc. Capacity utilization impacts business performance. Capacity analytics helps to determine whether the business is running at optimum capacity utilization. It can help spot if the resources are being under utilized or if the employees are working over-capacity. It can also help the business to determine how much and when to increase capacity.
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Operations Management
Operational Management involves administrative and operational decisions focused on operational control of the organization's capacity to efficiently carry out the tasks set forth by strategic and middle management decisions and decision-makers. Operational management takes place within the context of broad policies and objectives set out by strategic decision-making. Operational management focuses on how to best use the organizations production resources, capabilities and competencies to create and deliver value to customers.
Operational control decisions involve determining which organization units will carry out the tasks, establishing criteria for completion, resource utilization, and evaluating outputs. Operational decisions, unlike strategic decisions, are repetitive, routine and involve definite procedure for handling so they do not have to be treated each time as if they were new.
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Operations management focuses on the control of the means - processes and resources - by which organizations create and deliver value. It involves structured decision-making, concerned with how efficiently and effectively resources are utilized and how well operations units are performing.
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Operations Management involves administrative and strategic decision-making processes focused on Operations Strategy design, Operations Systems design, operations process design and operations control systems design.
- Operations Strategy design decisions are concerned with choices and commitment to organization operations infrastructure, operations structure design.
- Operations System for the organization's production unit - This is the joint configuration of resources and processes with the resulting competencies ...
- Tactical Decisions - Tactically, Operations Management focuses on utilizing the Operations System to carefully manage the processes and resources, of the organization to produce and distribute products and services to customers which in turn realize strategic decisions to capitalize on opportunities.
- Operational Control Decisions - Operational control decisions involve determining which organization units will carry out the tasks, establishing criteria for completion, resource utilization, and evaluating outputs. Operational decisions, unlike strategic decisions, are repetitive, routine and involve definite procedure for handling so they do not have to be treated each time as if they were new.
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Operational Engine Visualization
Analyzing Operational Engine performance and effective capacity based on process simulation techniques to provide information on resource utilization (labor and equipment and storage), production process performance in delivering products and/or services to customers that informs management decisions on optimum effective capacity for an Operations System configuration for a given product-mix.
The Operational Engine production process refers to any activity or group of activities that take one or more inputs, transforms and adds value to them, and provides outputs for customers or clients. Typical simulation analyses focus on experiments to help understand impact of changes at:
- The resource level (e.g., what if the organization bought a faster check sorter?),
- The process structure level (e.g., what if the organization allowed existing customers to skip the credit check activity?), or
- The process context level (e.g., what if the customer demand increased dramatically because of marketing campaign?).
Process simulation provides participants, decision-makers, and stakeholders with understanding of interplay of process concepts and elements, and constraints, as well as insight into the influence on future performance (efficiency and effectiveness) of organization processes. The simulation experiment is driven by customer events and operations decisions and choices with respect to Operations System's configuration and system elements such as processes, labor, equipment, and facility such that the resulting competencies are aligned with and support the organization's mission.
Simulation and visualization of the utilization of Operations System for the different types of transformation i.e., manufacturing, transport, supply and service helps managers and key operations staff gain insight into the "real world" situations facing the company and the factors (i.e., changes in demand, changes in product-mix, etc.) that influence the capacity and resource utilization decisions relative to the different types of transformation i.e., manufacturing, transport, supply and service.
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