The Strategic vs. Operations Thinker
Oct 14, 2016
By: Mark Stevens
My job is consulting with all types of manufacturers, including small- and medium-sized job shops; in these cases I’m often working directly with the company’s owner/operator. It might be a bit of a generalization (okay, a fairly big generalization), but it seems there are two primary types: owner/operators who think operationally, and those who think strategically.
Operational thinkers are focused on the short term, on quick ROI, on maintaining a “status quo” level of business. This approach isn’t due to a lack of ability; rather it’s more about their attitudes toward risk and reward – they’re averse to risk and generally focused on quick rewards.
Strategic thinkers, on the other hand, have their eyes on the horizon, looking for how markets will change, searching for practical ways to innovate and differentiate. They’re not content with “good enough” and know they need to differentiate their companies in ways that are valuable to their target customers and markets.
Mind you, there’s nothing inherently wrong with either approach and I thoroughly enjoy each of the people with whom I consult; it’s just that there’s a big difference in how they look at things and, as a consequence, in the nature and speed of their growth.
When we sit down to talk about how their organizations are run and where they want to be in five or 10 years, I quickly learn which type I’m talking to.
Operational and strategic thinkers approach the following critical business topics very differently:
Business owners and CFO types know there’s only so much money to spend each year; everything is a choice of one thing over another, and whatever they spend it on, it better deliver value. A strategic thinker knows that you get what you pay for (i.e., those things that deliver greater benefit will usually cost more), while an operational thinker will want to put money where ROI is immediate, or at least where he or she can physically see their investment; a new piece of equipment is tangible and he can delight himself by watching product being turned out. An ERP system, on the other hand, works quietly in the background – there’s no satisfying roar when the machine starts up, and there’s no finished product to count. Nevertheless, the value and ROI of an ERP system is undeniable, and in many ways more impressive in its ability to move job shops into new markets with new products using new strategies.
Operational thinkers are typically content growing horizontally—investing in expanding their capabilities using existing equipment and the existing skills of their workforce. They’re satisfied with growing according to the market demand for their products. Strategic thinkers, on the other hand, are focused on growing vertically: moving up and down the food chain, in some cases taking on more of their vendors’ roles in serving their customers. They sometimes decide they can take on more of their vendors’ roles to better serve customers, so they add capabilities that allow them to be more indispensable (often at a lower cost to the customers); sometimes they determine they can do something better than their customers, so they move into that space and offload some of the resources they no longer need.
Success to some operational thinkers means that things remain status quo; they may not get better, but they’re not getting worse! The absence of decline or growth, though, is not a good measure of real success. Strategic thinkers know that getting by comfortably isn’t a place of strength and, to achieve sustainable growth, they need visibility into every aspect of their business; that way they can draw out insights that allow them to make better decisions. These are the business people who know they need a more sophisticated tool than Excel; they’re looking for a comprehensive system that will give them actionable insights on customers, vendors, transportation, supply chain, labor, inventory…everything that affects their long-term success.
3. The Future
Operational thinkers have their sights anxiously set on the next week or month, rarely the next quarter and certainly not the next year. They’re in tactical mode or, worse, putting-out-fires mode. Their job shop is doing okay and they’ll only consider big change (and an ERP system is, for all intents and purposes, a big change) only when something is irretrievably broken. And when that happens, they’re not about to replace their broken thing with a best-in-class whatever; they’re looking at the price tag, not the long-term benefits. Strategic thinkers? These people act in the interest of the long-term. They’re about investments that will pay off later; they’re the people maxing out their 401(k)s because they know it’s going to make for a great retirement. This is the type of person I get most excited to work with because they quickly see the potential for an ERP system to take them to new places—doing business with new people selling new products.
Don’t get me wrong: thinking (and acting) operationally isn’t objectionable; it’s sometimes necessary, particularly in certain areas of the business (who thinks long-term about janitorial services or office supplies?). But it’s also not the fast track to achieving the kind of growth most job shops say they want to achieve.
If sustainable growth and long-term success is what you’re after, then you’ll want to work with the manufacturing team at Wipfli to take utmost advantage of everything a cloud-based ERP like NetSuite offers, not the least of which is the ability to take advantage of more and more profitable opportunities. This is possible when you have access to data that gives you valuable new insights into your business – insights that will improve the way you make decisions, the way you operate, and the way you take products to market.