Jimmy Dixon, business advisor with Oliver Wight Americas, explains the concept of “operationalizing strategy,” and how to put it into practice.
Most companies are familiar with the notion of strategy deployment — devising various initiatives and projects as part of a larger strategic plan. The harder thing to do, Dixon says, is turn that strategy into action and results — in other words, “operationalize” it.
A company aiming to achieve a long-range goal such as revenue growth, margin expansion or new-market entry needs to specify the accompanying assumptions related to volume, value, investment and the resources required to execute the strategy over a designated planning horizon. Only with a detailed plan to execute the strategy “can I stand any chance of having a way to deliver on that strategic intent,” Dixon says.
Many companies fail to take such action because they’re caught up in the requirements of the short-range budget cycle. The broader strategy therefore becomes disconnected from the business planning effort.
Executives must, of course, make their monthly or quarterly numbers; investors demand it. At the same time, they need to have a plan for executing on the longer-term strategy. And that requires paying attention to multiple “funnels” of business activity, such as commercial growth, innovation, acquisitions, productivity and capital management.
Leaders looking to do one constructive thing in the coming quarter to operationalize strategy should ensure they have a plan that extends over the strategy horizon, reaching out as far as five years, Dixon says. And when conditions change, they can employ integrated business planning to examine their initial assumptions, then make the necessary adjustments to stay on track.
