Operational Excellence for Growth

 

The fundamental premise of any business organization (the firm) is that it creates value for its customers, depicted in the form of a product or a service it provides to its customers, which, in turn, creates value for other stakeholders and also builds its brand.

Value Creation System in a firm can be thought of consisting of two distinct components – an “external” component and an “internal” component. The “external” component deals with understanding customer needs through market research and other means, segmenting the market, targeting specific segment(s), positioning the products or services and making them available to the customers through appropriate channels, promotional activities and building relationships with customers and partners. The “internal” component that may be dubbed as “operations”, consists of all the tasks that are done within the organization to “build” and “deliver” the product/service to the customer as well as support activities related to people, process and technology.

The external component is often depicted as the business model. The organizations also require an operating model to operationalize their business model or, in other words, to execute their business strategy. Three key components of any operating model are people, process and technology.

Your business strategy is all about building your brand. Your business growth is directly linked to the growth of your brand. If you want to ensure that your business strategy is holistic and takes into account all possibilities to grow your brand and your business, you must look at both the external as well as the internal factors.

As depicted in the diagram below, both external and internal factors can contribute to building a competitive edge and evolving a value proposition for the business. There should be a two way interaction between external and internal factors for formulating the business strategy. While external factors may help in setting goals for operational excellence, possibilities in operational excellence may provide a decisive competitive edge and influence the value proposition that can be offered to the customers.

 

 operational excellnece

 

Most CEOs have a disproportionate emphasis on the “external” component owing to the fact that they come from Sales and Marketing background. The “internal” component is often thought of as a cost to the organization and does not receive sufficient attention. Few organizations put enough effort to do a comprehensive design of their operating model. Most of them deal with the operating model in a “silo” approach rather than an integrated approach. This also means that the full potential of these components of operating model may not be realized. However, if we look at Operational Excellence as a key component of your business strategy, it opens up myriad possibilities for growing your brand and your business.