Operational ceos design businesses with the same rigour and discipline that they expect their teams to bring to designing new products, identifying clear requirements for operational performance and evaluating alternative operating model designs.
The challenges facing CEOs have never been greater: increasingly demanding customers, rapidly changing technology, accelerating industry dynamics, global competition. This tough business environment has seen the emergence of a new generation of ‘operational CEOs’. These are results-driven, operationally-savvy executives who realise that strategy on its own isn’t enough; delivering results requires a mastery of operational strategy. They take their inspiration from companies like Southwest Airlines, Toyota and Zara, who have leveraged operational strategy to create innovations that have profoundly altered the dynamics of their industries.
Managing outcomes
Being operational doesn’t mean that CEOs need to manage operations directly. Instead, they focus on managing the outcomes. They understand that businesses and their operations need to be explicitly designed, not just left to evolve organically, and that they have a critical role in defining the performance that each part of their business must deliver. They design businesses with the same rigour and discipline that they expect their teams to bring to designing new products, identifying clear requirements for operational performance and evaluating alternative operating model designs. They realise that sometimes incremental improvements aren’t enough; significant changes to their company’s operating model may be required to deliver the results they need.
Operational CEOs understand that all components of what a business does, from customer acquisition to customer service and support, need to be viewed in an operational context. They know the strengths and limitations of their current operating model and how it is different from their competitors. They have a firm grasp of the key operational metrics for every part of their business and understand the interdependencies between them and the performance trade-offs involved.
Designing & implementing new operating models
Start-ups have the chance to create their operating models from scratch – which is why they can be so dangerous. Operational CEOs understand how the limitations of their current operating model can constrain the strategic options available to their business. They also recognise the potential of operational innovation to change the basis of competition. They know the key design decisions businesses in their industry need to make and the time and cost involved in making changes to the different components of their operating model. Faced with significant uncertainty, operational CEOs put a premium on flexibility, and they design operating models that can respond rapidly to new opportunities and changing market conditions.
Zara: fast fashion delivers results
Zara, the Spanish fashion retailer, demonstrates how operational innovation and a radically different operating model can redefine the basis of competition and deliver superior business results. The company’s strategic vision is to deliver value-based fashion – fast. Zara can get new clothing designs from the drawing board onto store shelves in as little as two weeks, while it takes most retailers four to twelve months. The key to the company’s success is a high-speed operating model that integrates every aspect of the business, from product development to retail.
The challenges facing CEOs have never been greater: increasingly demanding customers, rapidly changing technology, accelerating industry dynamics, global competition. This tough business environment has seen the emergence of a new generation of ‘operational CEOs’. These are results-driven, operationally-savvy executives who realise that strategy on its own isn’t enough; delivering results requires a mastery of operational strategy. They take their inspiration from companies like Southwest Airlines, Toyota and Zara, who have leveraged operational strategy to create innovations that have profoundly altered the dynamics of their industries.
Managing outcomes
Being operational doesn’t mean that CEOs need to manage operations directly. Instead, they focus on managing the outcomes. They understand that businesses and their operations need to be explicitly designed, not just left to evolve organically, and that they have a critical role in defining the performance that each part of their business must deliver. They design businesses with the same rigour and discipline that they expect their teams to bring to designing new products, identifying clear requirements for operational performance and evaluating alternative operating model designs. They realise that sometimes incremental improvements aren’t enough; significant changes to their company’s operating model may be required to deliver the results they need.
Operational CEOs understand that all components of what a business does, from customer acquisition to customer service and support, need to be viewed in an operational context. They know the strengths and limitations of their current operating model and how it is different from their competitors. They have a firm grasp of the key operational metrics for every part of their business and understand the interdependencies between them and the performance trade-offs involved.
Designing & implementing new operating models
Start-ups have the chance to create their operating models from scratch – which is why they can be so dangerous. Operational CEOs understand how the limitations of their current operating model can constrain the strategic options available to their business. They also recognise the potential of operational innovation to change the basis of competition. They know the key design decisions businesses in their industry need to make and the time and cost involved in making changes to the different components of their operating model. Faced with significant uncertainty, operational CEOs put a premium on flexibility, and they design operating models that can respond rapidly to new opportunities and changing market conditions.
Zara: fast fashion delivers results
Zara, the Spanish fashion retailer, demonstrates how operational innovation and a radically different operating model can redefine the basis of competition and deliver superior business results. The company’s strategic vision is to deliver value-based fashion – fast. Zara can get new clothing designs from the drawing board onto store shelves in as little as two weeks, while it takes most retailers four to twelve months. The key to the company’s success is a high-speed operating model that integrates every aspect of the business, from product development to retail.
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Source : IIPM Editorial, 2011.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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