Monday, July 28, 2014

Connections between Strategy and Operations

Virgil R. Carter

Most non-profit organizations have a strategic plan.  Virtually all of these organizations also have an annual operating budget.  Some organizations also develop and use an annual business or operational plan.  But what’s the connection among these?  How can you, your staff and volunteer leaders assess the connection between your strategy and annual operations?

The business press frequently hosts readable articles on the important connection between strategy and operations.  Although written for business, many topics are equally useful for non-profit organizations.  Colorful titles suggest the importance of the issue, including “Putting Leadership Back Into Strategy”, “Mastering the Management System”,  “Five Competitive Forces That Shape Strategy” and the compelling “Innovation Killers:  How Financial Tools Destroy Your Capacity to Do New Things”.  These topics are as common to the non-profit world as the for-profit world.

I have worked with the Balanced Scorecard (BSC) as a tool to identify strategy and successfully link it with operations, enabling an organization to successfully cascade strategy throughout the organization’s operations, using metrics and key initiatives.  One of the compelling concepts of the BSC is “balance”—a balanced approach for each organization.  Using the BSC, it is even possible to embed strategy in annual performance planning and evaluation for staff and volunteers. “Mastering the Management System” by Kaplan and Norton, the Harvard Business School professors who are the founders and developers of the Balanced Scorecard, is one important read for those looking for ways to better connect strategy with operations.

Here’s an important connection between strategy and operations:  “Successful strategy execution has two basic rules:  understand the management cycle that links strategy and operations, and know what tools to apply at each stage of the cycle”, write authors, Norton and Kaplan  

Want to improve the connections between your strategy and operations?  Think about your annual management cycle and how the various elements of your annual cycle can be best integrated with your overall strategy.  How can your annual budgeting cycle be linked to your strategy?  How can your business planning cycle be linked to your strategy?  How can you develop usable metrics and evaluations to assess your operations and the extent to which they support your organization’s strategy?  

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