operations management controls the implementation of the business plan

Operations Management Implementation

Operations Management Implementation, as an enhanced system with predictive scorecards, provides valuable insights to what is occurring in the process.

Operations Management Implementation involves the design, management, and control of processes in the production of goods and services. Included in operations management are the development and utilization of resources throughout organizational supply chains at both the tactical and operational levels.

Tactical issues include:

• Facilities structure and layout
• Equipment selection
• Equipment replacement

Operational issues include:

• Scheduling and control
• Inventory management
• Material handing
• Maintenance

Operations management

Operations management converts inputs (e.g., materials and labor) into outputs (e.g., products and services) so that the organization benefits. Operations Management ensures that business operations are efficient in terms of using as few resources as needed, and effective in terms of meeting customer requirements. Operations management balances costs with revenue for the purpose of maximizing net operating profit.

An Implementation System

Integrated Enterprise Excellence (IEE) provides a long-lasting structure for implementing and the objectives of Operations Management. IEE addresses the operational management scorecard and improvement issues described in a 1-minute video :

IEE is a sustainable business management governance system, which integrates:

• Business scorecards
• Process improvement

An IEE system can help organizations move toward the three Rs of business (everyone is doing the Right things and doing them Right at the Right time). IEE provides the framework for innovation and continual improvement.

The existence and excellence of a business depends on more customers and cash, or, E=MC 2 . As a business way of life, IEE provides the organization orchestration to achieve more customers and cash through its 9-step implementation roadmap.

An Enhanced Approach for Operations Management Implementation

For additional information about Integrated Enterprise Excellence (IEE) see:

• Business Management Implementation: IEE Articles, Videos, Books
• An Operations Management Implementation to address Executive Challenges
• An Operations Management Implementation that transitions historical reported dashboards and scorecards to predictive reports (10 application illustrations shown)
• Using within an Operations Management Implementation a predictive performance metric system

Application of IEE to Creation of a Long-lasting Business Process Management (BPM) and Management Information System (MIS) Implementation

How to benefit from the IEE system in operations management with its Enterprise Performance Reporting System (EPRS) software (which provides predictive scorecard reporting and a process improvement system so the big picture benefits) is described in:

• How to Avoid Commonplace Business Management System Software Problems
• How to Avoid Commonplace Management Information System Software Problems
• How to Avoid Commonplace Business Process Management Software Problems
• How to Avoid Commonplace Lean Six Sigma Problems

Contact Us through an e-mail or telephone call to set up a time for a discussion on how your organization might gain much from an Integrated Enterprise Excellence Business Process Management system. Or, a Zoom meeting can be schedule directly:

E-mail ( [email protected] ) or call us (+1.512.918.0280), if you encounter difficulties setting up a Zoom session directly or want to schedule another time that is not available in the Zoom-meeting calendar.

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A Manager’s Guide to Successful Strategy Implementation

• 16 Jan 2024

To address business challenges and concerns, organizations must constantly monitor, evaluate, and adjust their strategic initiatives . When it’s time to implement a new strategy, it’s typically up to managers to do so.

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What Is Strategy Implementation?

According to the online course Strategy Execution , strategy implementation is the process of turning plans into action to reach business goals and objectives . In other words, it’s the art of getting stuff done.

Your organization’s success rests on your ability to implement decisions and execute processes efficiently, effectively, and consistently. Yet, that’s often easier said than done.

“If you've looked at the news lately, you've probably seen stories of businesses with great strategies that have failed,” says Harvard Business School Professor Robert Simons, who teaches Strategy Execution . “In each, we find a business strategy that was well formulated but poorly executed.”

You can learn a lot from failed strategies , and understanding how to implement a successful one is vital to leading change. Here are steps you can take to effectively roll out your business strategy .

4 Steps in the Strategy Implementation Process

1. handle tension.

Making tough choices isn’t easy, and you need to manage any tension that arises with change.

In strategy implementation, tension often exists between innovating to grow your business and controlling internal processes and procedures.

For example, leaders at ride-hailing company Uber have faced challenges in balancing growth and control. While Uber has transformed the transportation industry, its need to expand has led to several instances of misconduct due to insufficient internal controls .

You can manage tension and find balance by designing and implementing levers of control , which comprise:

• Belief systems : Organizational definitions you communicate and reinforce to provide direction to employees
• Boundary systems : Negatively phrased statements that tell employees what behaviors are forbidden
• Diagnostic control systems : Formal information systems that help monitor organizational outcomes
• Interactive control systems : Formal systems managers use to involve themselves in subordinates' decisions that impact strategic uncertainties

These levers help create opposing forces throughout strategy implementation that continuously balance each other. While half of them (belief systems and interactive control systems) promote innovation and inspiration, the others (boundary systems and diagnostic control systems) establish boundaries and threats of punishment when employees cross the line.

To ensure your strategy execution succeeds , use the power of tension when designing management control systems.

2. Align Job Design to Strategy

No matter how well-formulated your business strategy is, it can’t succeed without your team. To prime employees for success, it’s essential to design jobs with strategy in mind.

Job design is structuring jobs’ components to enhance organizational efficiency. Its common elements include task allocation, job development, and feedback and communication.

“Job design is a critical part of strategy execution,” Simons says in Strategy Execution . “If individuals don't have the resources they need and aren’t accountable in the right way, they won’t be able to work to their potential.”

According to Simons, you can use the Job Design Optimization Tool (JDOT) to design or test jobs by analyzing their balance of demands and resources.

The tool prompts you to consider:

• What resources do employees have to get the job done?
• What measure will we use to evaluate their performance?
• Who must they influence to achieve their goals?
• How much support can they expect when reaching out for help?

By answering these questions and ensuring they align with your strategy, employees can directly support your initiatives.

3. Inspire Employee Buy-In

Even if you position employees for success through effective job design, you must still gain their buy-in for strategic goals . According to a Gallup survey , organizations with strong employee engagement experience 10 percent greater customer loyalty and 23 percent higher profitability.

You can garner their support by communicating your organization’s core values —its purpose that impacts what employees should do and how they should act.

According to Strategy Execution , effective core values possess two attributes:

• Inspiration: They make employees proud of where they work.
• Guidance: They ensure employees know whose interests to prioritize when making difficult decisions.

Communicating your organization’s core values doesn’t just help bolster support for strategic initiatives; it also provides employees with a purpose to improve performance and workplace accountability .

Another useful tool is ranking systems.

“Ranking systems—which are quite common in practice—have really good features that managers can use to stimulate performance,” says HBS Professor Susan Gallani in Strategy Execution .

Ranking systems provide clear measures—like leadership capabilities—for employees to determine their ownership in your business strategy. Gallani says establishing such measures helps eliminate unknowns that create anxiety.

“What the ranking system does—it takes that shock away,” Gallani says in Strategy Execution . “Everybody's compared at the same level, and that's good because it really highlights the individual contribution of different workers and points out who did better and who did worse.”

By implementing ranking systems, achievement-driven employees can be more likely to invest in your business strategy.

Related: How to Get Employee Buy-In to Execute Your Strategic Initiatives

4. Manage Risk

Even if you take these steps when implementing your business strategy, your initiatives can still fail.

“Competing successfully in any industry involves some level of risk,” Simons says in Strategy Execution . “But high-performing businesses with high-pressure cultures are especially vulnerable. As a manager, you need to know how and why these risks arise and how to avoid them.”

Engaging in risk management —the systematic process of identifying, assessing, and mitigating threats or uncertainties that can affect your organization—is crucial to long-term success.

Three types of pressures that make you vulnerable to risk are:

• Information management

Business risks aren’t always obvious, making it critical to identify unexpected events or conditions that could impede your organization’s business strategy .

“I think one of the challenges firms face is the ability to properly identify their risks,” says HBS Professor Eugene Soltes in Strategy Execution .

For example, the automotive industry heavily relies on semiconductors. However, due to an unexpected disruption in manufacturing priorities during the COVID-19 pandemic, companies had to navigate production during a semiconductor shortage .

By understanding your strategy’s vulnerabilities, you can prevent failures because of unanticipated events and protect your organization from challenges like increased market competition, evolving technologies, and shifting customer needs .

Learn How to Oversee Strategy Implementation

Implementing strategy successfully is challenging.

By taking an online strategy course , such as Strategy Execution , you can draw insights from real-world business examples and build the strategy execution skills and knowledge to achieve your organization’s objectives.

Do you want to improve your strategy implementation? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to take the first step toward doing so.

This post was updated and republished on January 16, 2024. It was originally published on February 25, 2020.

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Operational Planning: How to Make an Operations Plan

The operations of your business can be defined as the sum of all the daily activities that you and your team execute to create products or services and engage with your customers, among other critical business functions. While organizing these moving parts might sound difficult, it can be easily done by writing a business operational plan. But before we learn how to make one, let’s first understand what’s the relationship between strategic and operational planning.

Operational Planning vs. Strategic Planning

Operational planning and strategic planning are complementary to each other. This is because strategic plans define the business strategy and the long-term goals for your organization, while operational plans define the steps required to achieve them.

What Is a Strategic Plan?

A strategic plan is a business document that describes the business goals of a company as well as the high-level actions that will be taken to achieve them over a time period of 1-3 years.

What Is an Operational Plan?

Operational plans map the daily, weekly or monthly business operations that’ll be executed by the department to complete the goals you’ve previously defined in your strategic plan. Operational plans go deeper into explaining your business operations as they explain roles and responsibilities, timelines and the scope of work.

Operational plans work best when an entire department buys in, assigning due dates for tasks, measuring goals for success, reporting on issues and collaborating effectively. They work even better when there’s a platform like ProjectManager , which facilitates communication across departments to ensure that the machine is running smoothly as each team reaches its benchmark. Get started with ProjectManager for free today.

What Is Operational Planning?

Operational planning is the process of turning strategic plans into action plans, which simply means breaking down high-level strategic goals and activities into smaller, actionable steps. The main goal of operational planning is to coordinate different departments and layers of management to ensure the whole organization works towards the same objective, which is achieving the goals set forth in the strategic plan .

How to Make an Operational Plan

There’s no single approach to follow when making an operation plan for your business. However, there’s one golden rule in operations management : your strategic and operational plans must be aligned. Based on that principle, here are seven steps to make an operational plan.

• Map business processes and workflows: What steps need to be taken at the operations level to accomplish long-term strategic goals?
• Set operational-level goals: Describe what operational-level goals contribute to the achievement of larger strategic goals.
• Determine the operational timeline: Is there any time frame for the achievement of the operational plan?
• Define your resource requirements: Estimate what resources are needed for the execution of the operational plan.
• Estimate the operational budget: Based on your resource requirements, estimate costs and define an operational budget.
• Set a hiring plan: Are there any skills gaps that need to be filled in your organization?
• Set key performance indicators: Define metrics and performance tracking procedures to measure your team’s performance.

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Operational Plan Template

Use this free Operational Plan Template for Word to manage your projects better.

What Should be Included in an Operational Plan?

Your operational plan should describe your business operations as accurately as possible so that internal teams know how the company works and how they can help achieve the larger strategic objectives. Here’s a list of some of the key elements that you’ll need to consider when writing an operational plan.

Executive Summary

An executive summary is a brief document that summarizes the content of larger documents like business plans, strategic plans or operation plans. Their main purpose is to provide a quick overview for busy stakeholders.

Operational Budget

An operational budget is an estimation of the expected operating costs and revenues for a given time period. As with other types of budget, the operational budget defines the amount of money that’s available to acquire raw materials, equipment or anything else that’s needed for business operations.

It’s important to limit your spending to stay below your operational budget, otherwise, your company could run out of resources to execute its normal activities. You can use our free operating budget template for Excel to track your operating costs.

Operational Objectives

It’s essential to align your operational objectives with your strategic objectives. For example, if one of your strategic objectives is to increase sales by 25 percent over the next three years, one possible operational objective would be to hire new sales employees. You should always grab your strategic plan objectives and turn them into one or multiple action items .

Processes & Workflows

Explain the various business processes, workflows and tasks that need to be executed to achieve your operational objectives. Make sure to explain what resources are needed, such as raw materials, equipment or human resources.

Operational Timeline

It’s important to establish a timeline for your operational plan. In most cases, your operational plan will have the same length as your strategic plan, but in some scenarios, you might create multiple operational plans for specific purposes. Not all operational plans are equal, so the length of your operational timeline will depend on the duration of your projects , workflows and processes.

Hiring Plan

Find any skills gap there might be in your team. You might need to hire a couple of individuals or even create new departments in order to execute your business processes .

Quality Assurance and Control

Most companies implement quality assurance and control procedures for a variety of reasons such as customer safety and regulatory compliance. In addition, quality assurance issues can cost your business millions, so establishing quality management protocols is a key step in operational planning.

Key Performance Indicators

It’s important to establish key performance indicators (KPIs) to measure the productivity of your business operations. You can define as many KPIs as needed for all your business processes. For example, you can define KPIs for marketing, sales, product development and other key departments in your company. This can include product launch deadlines, number of manufactured goods, number of customer service cases closed, number of 5-star reviews received, number of customers acquired, revenue increased by a certain percentage and so on.

Risks, Assumptions and Constraints

Note any potential risks, assumptions and time or resource constraints that might affect your business operations.

Free Operational Plan Template

Leverage everything you’ve learned today with our template. This free operational plan template for Word will help you define your budget, timeline, KPIs and more. It’s the perfect first step in organizing and improving your operations. Download it today.

What Are the Benefits of Operational Planning?

Every plan has a massive effect on all team members involved, and those can be to your company’s benefit or to their detriment. If it’s to their detriment, it’s best to find out as soon as possible so you can modify your operational plan and pivot with ease.

But that’s the whole point of operational planning: you get to see the effect of your operations on the business’s bottom line in real time, or at every benchmark, so you know exactly when to pivot. And with a plan that’s as custom to each department as an operational plan, you know exactly where things go wrong and why.

How ProjectManager Can Help with Operational Planning

Creating and implementing a high-quality operational plan is the best way to ensure that your organization starts out a project on the right foot. ProjectManager has award-winning project management tools to help you craft and execute such a plan.

Gantt charts are essential to create and monitor operational plans effectively. ProjectManager helps you access your Gantt chart online so you can add benchmarks for operational performance reviews. You can also create tasks along with dependencies to make the operation a surefire success.

Whether you’re a team of IT system administrators, marketing experts, or engineers, ProjectManager includes robust planning and reporting tools. Plan in sprints, assign due dates, collaborate with team members and track everything with just the click of a button. Plus, we have numerous ready-made project reports that can be generated instantly, including status reports, variance reports, timesheet reports and more.

Related Operations Management Content

• Operational Strategy: A Quick Guide
• Operations Management: Key Functions, Roles and Skills
• Operational Efficiency: A Quick Guide
• Using Operational Excellence to Be More Productive

Operational planning isn’t done in a silo, and it doesn’t work without the full weight of the team backing it up. Ensure that your department is successful at each benchmark. ProjectManager is an award-winning pm software dedicated to helping businesses smooth out their operational plans for a better year ahead. Sign up for our free 30-day trial today.

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What Is Operations Management (OM)?

Understanding operations management (om), operations and supply chain management (oscm), what operations managers do.

• Frequently Asked Questions

The Bottom Line

• Business Essentials

Operations Management: Understanding and Using It

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Operations management (OM) is the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.

Operations management teams attempt to balance costs with revenue to achieve the highest net operating profit possible.

Key Takeaways

• Operations management (OM) is the administration of business practices to create the highest level of efficiency possible within an organization.
• Operations management is concerned with converting materials and labor into goods and services as efficiently as possible.
• Corporate operations management professionals try to balance costs with revenue to maximize net operating profit.

Katie Kerpel / Investopedia

Operations management involves utilizing resources from staff, materials, equipment, and technology. Operations managers acquire, develop, and deliver goods to clients based on client needs and the abilities of the company.

Operations management handles various strategic issues, including determining the size of manufacturing plants and project management methods and implementing the structure of information technology networks. Other operational issues include the management of inventory levels, including work-in-process levels and raw materials acquisition, quality control, materials handling, and maintenance policies.

Operations management entails studying the use of raw materials and ensuring that minimal waste occurs. Operations managers use numerous formulas, such as the economic order quantity formula, to determine when and how large an inventory order to process and how much inventory to hold on hand.

The combination of understanding and coordinating the work of a company is central to becoming a successful operations manager.

A critical function of operations management relates to the management of inventory through the supply chain. This process is known as operations and supply chain management (OSCM). To be an effective operations management professional, one must be able to understand the processes that are essential to what a company does and get them to flow and work together seamlessly. The coordination involved in setting up business processes in an efficient way requires a solid understanding of logistics . 

An operations management professional understands local and global trends, customer demand, and available resources for production. Operations management approaches the acquisition of materials and the use of labor in a timely, cost-effective manner to deliver customer expectations. Inventory levels are monitored to ensure that excessive quantities are on hand. Operations management is responsible for finding vendors that supply the appropriate goods at reasonable prices and have the ability to deliver the product when needed.

Another large facet of operations management involves the delivery of goods to customers. This includes ensuring that products are delivered within the agreed time commitment. Operations management also typically follows up with customers to ensure that the products meet quality and functionality needs. Finally, operations management takes the feedback received and distributes the relevant information to each department to use in process improvement.

Operations managers are involved in coordinating and developing new processes while reevaluating current structures. Organization and productivity are two key drivers of being an operations manager, and the work often requires versatility and innovation. As part of their daily responsibilities, operations managers must possess a variety of skill sets, including:

• Technical expertise in areas such as production automation, data entry, budget tracking, and design.
• Organizational ability and attention to detail to include keeping track of project files, employee reports, budgets, schedules, and other details related to company processes.
• Motivational prowess in the form of strong leadership skills that provide the expertise to motivate others, inspire ideas, and foster a supportive and diverse team.
• Analytical aptitude , including skill in risk analysis and mitigation when initiating new projects. Operations managers also must analyze processes to identify challenges and offer solutions in the event that negative situations develop.
• Decision-making proficiency , especially under stress when there is very little time to assess all factors.
• Ability to maintain quality standards , including as they relate to raw materials, machinery, manufacturing procedures, packaging, delivery processes, and the finished product.

A master of business administration (MBA) degree in operations management can provide global perspective on industry trends and an awareness of financial regulations and political uncertainties that can affect an organization. It also provides a solid grasp of the inherent complexities and the tools needed to respond well to change.

What is the purpose of operations management (OM)?

Operations management (OM) is concerned with controlling the production process and business operations in the most efficient manner possible. OM professionals attempt to balance operating costs with revenue to maximize net operating profit.

What are some systems of operations management?

Modern operations management revolves around four theories:

• Business process redesign (BPR) , which is focused on analyzing and designing  workflow  and business processes within a company. The goal of BPR is to help companies dramatically restructure the organization by designing the business process from the ground up.
• Reconfigurable manufacturing systems , designed to incorporate accelerated change in structure, hardware, and software components. This allows systems to adjust rapidly to the capacity to which they can continue production and how efficiently they function in response to market or intrinsic system changes.
• Six Sigma , an approach that focuses on quality. The word “six” references the control limits, which are placed at six  standard deviations  from the normal distribution mean. Tools used within the Six Sigma process include trending charts, potential defect calculations, and other ratios.
• Lean manufacturing , which is the systematic elimination of waste within the manufacturing process. This theory sees resource use for any reason other than value creation for customers as wasteful and seeks to eliminate wasteful resource expenditures as much as possible.

What is an example of operations management?

Operations management is prevalent in the healthcare sector . The current healthcare system overuses expensive, technological, and emergency-based treatment. High costs from care often remain uncompensated due to uninsured patients. A prevalence of services in expensive settings creates a burden on taxpayers, health insurance holders, and healthcare institutions.

In simple terms, operations management (OM) is the process of prioritizing and employing business practices designed to achieve maximum efficiency as a means to achieve maximum profitability. Within the process, operations managers utilize organization and productivity to achieve their primary goals.

Balancing the efficient use of resources, including staff, materials, equipment, and technology, is key to a successful OM process and, by extension, to the success of the company.

University at Buffalo, School of Management. “ Operations and Supply Chain Management .”

Indeed. “ 15 Essential Operational Management Skills .”

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Operational Plan: Everything You Need To Know (2024 Guide)

The old way of planning no longer works in complex and unpredictable business environments, and companies are struggling to find their feet on shaky ground. As we’ve seen with many of our customers and strategies in Cascade, organizations can no longer count on executing three or even five-year strategic plans.

The new reality forces companies and their operations teams to adapt their operational plans more frequently and within shorter time frames if they want to reap benefits faster than their competitors. Organizations need to work on their strategic instinct and fast adaptability to enhance their operational efficiency .  

And that requires big changes—including building a flexible operational plan, supported by the right tools and systems that help you achieve real-time centralized observability and empower a strategic response to external disruptions.

Read this article to build a bulletproof operational plan that includes all the key elements necessary to overcome unpredictable business chaos. You’ll also get free templates that will help you rapidly adapt and align your teams.

✨Bonus: We’ve included pro tips from business leaders in our network to help you identify gaps in your strategy execution and build resilient business operations.

What Is An Operational Plan?

An operational plan is action and detail-oriented; it needs to focus on short-term strategy execution and outline an organization's day-to-day operations. If your operations strategy is a promise, your operational plan is the action plan for how you will deliver on it every day, week, and month.

Put simply, an operational plan helps you bridge the gap between business strategy and on-the-ground execution and ensures that the organization is on track to achieve its long-term goals.

Benefits of operational planning

• Clear definition of relationships between cross-functional teams in different departments and responsibilities for each to eliminate duplicated efforts.
• Tighter alignment between corporate or business unit strategic plans and on-the-ground execution, helping the organization meet its business targets.
• Strong operating system that enables the company to quickly adapt, deliver operations goals, and monitor performance.

Operational planning vs. strategic planning

Operational planning deals with the day-to-day details and short-term goals, while strategic planning focuses on the big picture and long-term direction of an organization.

To put it in simpler terms, operational planning is about the "how" of daily tasks, while strategic planning defines the "what" and "why" for future success.

📚Recommended reading: Strategic vs. Operational Planning

Kickstart Your Operational Planning Process: Lay The Foundation

The quality of your operational plan will depend on your input. A successful operational planning initiative will consider these aspects:

• Who will be involved? Identify and include employees, customers, and the management team in the planning process to gain valuable insights from the front lines, ensuring better strategy and execution buy-in.
• What are your internal capabilities? Assess internal capabilities by conducting an internal analysis , including resource requirements, operating budget, and talent skills. Talent management and employee engagement are just a few of the many challenges that COOs will have on their operations agenda.
• What environment are you operating in? Conduct an external analysis (e.g., PESTLE or Porter’s 5 Forces ) to inform your approach and identify optimization opportunities and risks, keeping you agile in a changing market.
• Is it aligned with your organization’s strategy? Ensure alignment of your operational plan with your organization’s strategic plan to actively support the company's long-term vision and contribute to key business metrics.

👉🏻 Once you’ve gathered this information, you can develop an operational plan to help you execute business strategies.

Key Elements Of Your Operational Plan

Enough chit-chat; it’s time to put your operational plan together. We've built this based on our proven and tested approach, used by over +45,000 Cascade users.

See how Cascade Strategy Execution Platform enhances operational efficiency by reducing duplication and aligning teams toward common goals. It effectively eliminates waste resulting from misalignment, fostering smoother operations and improved performance.

Here’s a recap of the five key elements your plan must consider:

Choose key metrics aligned with the company goals

Selecting your operational plan's key metrics isn't a mere exercise in tracking numbers; it's about laser-focused alignment with your business needs and objectives. These metrics are the tangible indicators of your organization's efficiency and performance. They serve as the compass, guiding your daily decisions and actions toward achieving concrete results.

By precisely aligning these metrics with your company's core objectives, you ensure that every initiative and action within your operational plan directly contributes to achieving tangible results.

An aligned operational plan makes it easier to:

• Communicate roles and responsibilities to all employees so they know how their efforts contribute to overall business success.
• Identify and address operational bottlenecks and inefficiencies that could derail strategy execution.
• Motivate and engage employees to work toward strategic objectives and deliver on business outcomes.

Remember that the role of operations is to close the gap between your organization's strategic goals and what is being done on a daily basis to make them happen.

👉🏻 How Cascade can help:

With Cascade’s Metrics Library , you can bring your operating and financial business-level goals together with your strategy under one single roof. This makes reporting & governance easy, accurate, and less time-consuming by connecting your business data to your key business initiatives.

Through Cascade’s integrations , you can consolidate your metrics in one place, importing your data directly from business systems, data lakes, BI tools, or even spreadsheets.

Define the focus areas of your operational plan

The focus areas of your operational plan are the key areas of the business that the plan will address.

This will depend on your business plan. Think about how the business operates and how it succeeds. Do you need to pursue short-term cost reductions while simultaneously pursuing longer-term growth and transformation initiatives? Your operational plans must be built on these strategic priorities.

For example, you can prioritize your focus areas based on the most relevant business strategies or by specific departments. Some examples of focus areas could be:

• Administration
• Human Resources

💡Tips to help define the focus areas of your operational plan:

• Identify the business's key challenges and opportunities.
• Consider the business's overall long-term strategy and key metrics and how the operational plan's focus areas can support these objectives.
• Bring other people on board to help you identify what needs to be addressed by the operations plan.

Create strategic objectives for your operational plan

Strategic objectives are specific goals aligned with the operation’s strategy and focus areas. They represent what you want to achieve in each focus area and will serve as the building blocks of your plan, ensuring that it’s focused and actionable.

Some examples of strategic objectives:

• Reduce costs by 10% within the next year by implementing more efficient processes and streamlining the supply chain over the next year.
• Launch three new products in the next fiscal year to expand your product lines and increase revenue.
• Increase customer satisfaction scores by 5% within the next six months.

💡Tips for defining strategic objectives include:

• Ensure your objectives are specific, measurable, achievable, relevant, and time-bound (SMART).
• Consistently align objectives with your operational plan's focus areas and the company's goals.
• Don’t be afraid to get input from other people about your objectives.

Identify and prioritize projects

It’s time to identify and prioritize the projects that need to be executed. Remember, projects are action plans to help you achieve your strategic objectives.

Project planning should include thinking about time frames, task assignments, and deliverables (and prioritizing).

Here are some examples of project ideas:

• Localize sourcing for critical semi-finished materials.
• Streamline the supply chain to reduce costs and improve efficiency.
• Find and develop an alternative logistics channel.
• Implement a new customer service training program to improve customer satisfaction scores.
• Implement a new technology that will enable end-to-end supply chain visibility.

💡Tips for defining and prioritizing projects:

• Identify the specific actions and activities needed to achieve each strategic objective.
• Prioritize the projects based on their importance, feasibility, and potential impact on the business.
• Involve stakeholders in defining and prioritizing the projects to ensure their needs and concerns are heard.

Identify and track key performance indicators (KPIs)

Finally, you’ll need to know if your operational plan and day-to-day activities result in outcomes.

Set KPIs for key initiatives and strategic objectives to measure success, ensure alignment, and identify performance gaps in your operational plan.

Some examples of operations KPIs are:

• Inventory costs
• Costs of goods sold
• Revenue growth
• Employee retention rate
• Customer satisfaction score

💡Tips for defining and tracking KPIs:

• Align KPIs with your strategic objectives and focus areas so that you can track the plan's progress against these specific goals.
• Add both lagging and leading indicators .
• Instead of using multiple disconnected spreadsheets and project management tools, consider live dashboards or reporting systems to track the KPIs and monitor progress over time.

👉🏻 How Cascade can help build your plan:

Cascade’s planner feature enables you to build your operational plan with structure and ease by breaking down the complexity from high-level initiatives to executable outcomes. Define your key elements (focus areas, objectives, projects, and KPIs), and share the plan with your teams. You’ll get full visibility of the plan’s progress in real-time, allowing you to identify gaps, quickly update the plan, and communicate the change with your team with a single click.

👉🏻 If you don’t want to start building the plan from scratch, use our free Operational Plan Template pre-filled with examples of focus areas, objectives, projects, and KPIs that you can customize to meet your organization’s needs.

Operational Plan Examples & Templates

Here are five operational plan examples to help you create plans for your teams. You can use one master operational plan or set up an operational plan for each department.

Master Operational Plan Example

This Operational Plan Template will help you close the gap between business goals and day-to-day operations. You'll be able to set goals and KPIs for your top priorities and work with the operations team to deliver operational excellence and business results.

HR Plan Example

This HR Operational Plan Template can be used to meet staffing requirements, manage human capital and align human resources activities with your strategy. HR managers in any industry can create a clear operational plan that can be constantly monitored, adapted, and improved.

IT Plan Example

If you’re in the IT team, try out this IT Plan Template to get your IT operational planning up and running fast. It comes prefilled with focus areas and KPIs relevant to IT operations; you can easily customize workflows and deliverables to your needs.

Marketing Plan Example

This Marketing Plan Template can help you efficiently understand and plan your digital marketing operations using best practices. Use it to quickly set up priorities and get your social media and marketing teams moving on tasks that will make an impact.

Finance Plan Example

This finance-focused template is ideal if you want to get on top of your finance operations plan. Use it to allocate and distribute financial resources across your organization and get real-time updates through your dashboard and reports—which are great tools to create a visually compelling financial summary that clearly shows your key metrics.

💡Pro Tip: To ensure successful execution, it's crucial to align not just your master operational plan with your overarching strategic plan, but also all the operational department plans.

With the Alignment Maps feature, you’ll be able to visualize how your top-level business strategy breaks down into functional and operational plans. This empowers COOs and CFOs to consolidate their operational plans in one place, creating tighter alignment between the finance and operations teams and improving cross-collaboration to build more resilient operations.

Want to dig deeper? Use the Relationships feature to see the relationships between connected objectives from your plans and understand how your different department goals contribute to the core business metrics and goals. This view will allow you to clearly map dependencies, blockers, and risks that may lie along your journey.

5 Tips For An Effective Operational Plan And Its Execution

1. don’t underestimate the power of transparent communication.

Regularly communicate the operational plan and progress to all relevant stakeholders to build the necessary buy-in and support. Your employees must know your goals and the roadmap, and team members should understand their role in its execution. This business transparency will help everyone row in the same direction.

“Clarity regarding strategy is one of the key drivers of autonomous execution. If people understand what you’re working toward and have guardrails in place, they can be empowered to make their own decisions and don’t need everything to be ‘run up the chain’ to get approved. This allows you to move fast and at scale.” — Sam Sterling , Chief Strategy Officer, Akqa

2. Keep moving forward and adopt a growth mindset

Keep the momentum going and ensure that the plan is executed effectively. Regular monitoring and reviews can help identify and address any challenges or obstacles that may arise.

Schedule regular reviews and check-ins and provide the necessary support to ensure projects are on track and moving forward.

“I think adopting a growth mindset is super important. This means having the confidence to fail fast, try something new and empower people to do that.” — Ken Miller , General Manager, Azure Intelligent Cloud at Microsoft

With the Team Updates functionality, every team member can post updates on key measures, actions, and objectives. This will give you real-time visibility into performance and help you identify possible risks before it’s too late—without having to schedule extra meetings or nag your team members for updates.

3. Make strategic moves and change fast when you need to

Your operational plan should be flexible, adaptable, and open to adjustments. This means keeping an eye on progress, making corrections if needed, and being willing to adapt the plan to changing circumstances or new opportunities. As McKinsey suggests, you can consider creating a team that will be able to collect data, link analysis with action, and offer quick responses to rapid changes.

“Traditionally, companies would have taken that piece of paper and gone out and said: we're going to execute it, start to finish. Then get into the formulation of the strategy, what we need to hit, and what the end product result will be like. But what we do know is that’s never the case. Along the way, you're going to have bumps, and inevitably, you’ll need to change from that original picture.” — Annie Lucchitti , Marketing Manager, Unilever

4. Empower your operations team and boost efficiency

Effective operational planning requires the engagement and empowerment of your team. Involve stakeholders in the planning process and provide them with the necessary resources. Give them context and an opportunity to set goals and prioritize initiatives. This will help you boost engagement and hold them accountable for progress.

“I think it just works at every single level. Are people allowed to be themselves at work? Personally, are they at peace? Are they happy? Productivity happens when people have the right skills, but also when they are engaged and happy. If one of those fails a bit, productivity will start decreasing.” — Joan Torrents , Global Sourcing Manager, TESCO.

5. If it isn’t measured, it isn’t managed

Don’t underestimate the importance of tracking and measuring progress against the operational plan's goals and objectives. Set milestones, enforce KPIs, and stay on top of progress. Doing this will help you stay on course, empower you to act quickly, and provide valuable insights into what is going wrong.

“Data is a foundational element in the strategy definition phase as well as in the strategy execution phase as it helps create a baseline, identify key priorities, set goals, and measure progress.” — Erica Santoni , Principal, Diversity Equity & Inclusion, Intuit

Use Cascade’s Dashboards to monitor your day-to-day progress on key metrics and critical business and strategic information in real-time.

Compile the information in powerful reports and executive summaries in seconds with pre-built templates. Share them with your key stakeholders —internal and external— and invite them to collaborate on your strategy together.

Execute Your Operational Plan With Cascade 🚀

What good is an operational plan if no one executes it? If your organization wants to operate at a higher level, static tools like Excel spreadsheets, PowerPoints, Google Docs, and/or project management tools aren’t the solution.

❌They aren’t designed for adaptive strategy and planning.

❌They often lead to siloing and hinder effective cross-collaboration.

❌They make it challenging to measure progress and slow down decision-making.

With Cascade as your central operating system, you can stop running business operations blindfolded and embrace rapid, coordinated, and data-driven decision-making.

Get your Operational Plan Template to get started with a dynamic plan that will lead to actual outcomes for your business and see faster results from your strategy.

Or take Cascade for a spin! Start today for free or book a 1:1 product tour with Cascade’s in-house strategy expert.

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Exploring Operations Control Systems for Enhanced Efficiency

September 2, 2023 - 10 min read

In today's rapidly changing business landscape, organizations are continuously seeking ways to improve their efficiency and maximize their productivity. One area that plays a crucial role in achieving these goals is operations control systems. In this article, we will delve into the world of operations control systems, understanding their role in business, their key components, how they enhance efficiency, and the steps involved in implementing them. We will also explore future trends in this field, examining the impact of technology and predicted developments.

Understanding Operations Control Systems

Operations control systems serve as the backbone of any organization, playing a pivotal role in managing and coordinating various aspects of its operations. These systems provide a centralized platform that enables businesses to monitor and control their processes, resources, and tasks efficiently. 

The Role of Operations Control Systems in Business

Operations control systems play a vital role in driving business success. They enable companies to effectively manage their resources, minimize operational risks, and improve overall productivity. These systems also facilitate effective decision-making by providing accurate and timely information. With access to comprehensive data and analytics, businesses can make informed decisions that align with their strategic goals and objectives. This enables them to stay ahead of the competition and adapt to changing market dynamics. Lastly, operations control systems foster better collaboration and communication. By providing a centralized platform for task management and coordination, these systems guarantee that employees have a clear understanding of their responsibilities and can collaborate seamlessly. 

Key Components of Operations Control Systems

An operations control system typically consists of several key components that work together to enable effective management of operations:

• Data Collection and Monitoring Module: Involves the collection of data from various sources, such as sensors, machines, and software applications, and the continuous monitoring of operational metrics. Companies can utilize this module to gather real-time data on key performance indicators (KPIs) such as production output, quality metrics, and resource utilization. This data provides insights into the current state of operations, allowing businesses to identify potential issues or deviations from desired performance levels.
• Analytics and Reporting Module: Leverages advanced analytical techniques to process the collected data, identify patterns and trends, and generate meaningful insights. Through detailed reports and visualizations, businesses can gain a comprehensive understanding of their operations, identify areas for improvement, and track their progress over time. For example, they can perform in-depth analysis of their operations, such as root cause analysis, predictive modeling, and trend forecasting. 
• Task Management Module: Facilitates the planning, allocation, and tracking of tasks. This provides a centralized platform for employees to access and manage their tasks, and they can set deadlines and track their own progress. What's more, this module improves communication and collaboration among team members. It provides a platform for sharing updates, exchanging information, and seeking assistance, fostering a culture of teamwork and cooperation.

How Operations Control Systems Improve Workflow

Operations control systems enhance efficiency by optimizing workflow. By automating manual processes, eliminating bottlenecks, and improving communication and coordination among different departments, these systems ensure that work is streamlined and flows smoothly across the organization. This leads to faster turnaround times, reduced errors, and improved overall productivity.

Let's consider a manufacturing company that implements an operations control system. This system automates the process of tracking inventory levels, production schedules, and order fulfillment. Integrating these different aspects of the manufacturing process signifies that materials are available when needed, production is scheduled efficiently, and orders are fulfilled in a timely manner. As a result, the company experiences improved workflow, reduced lead times, and increased customer satisfaction.

Reducing Waste with Operations Control Systems

Operations control systems also possess the ability to identify and eliminate waste in various forms. These systems can help businesses identify unnecessary steps, reduce wait times, minimize excess inventory, and streamline their supply chain. They can even identify and address quality issues, which can help companies quickly implement the appropriate corrective action.

Picture a retail company that implements an operations control system. Through data analysis, the system identifies that a significant amount of waste is generated due to overstocking of certain products. With this insight, the company can adjust its inventory management practices, so that stock levels are aligned with customer demand. As a result, the company reduces waste, avoids unnecessary costs, and creates a more sustainable business model.

Implementing Operations Control Systems for Enhanced Efficiency

The implementation of an operations control system requires careful planning and execution. For a successful implementation, follow these key steps.

• Clearly define the objectives and identify the specific areas of the operations where efficiency needs to be improved. For example, a manufacturing firm may want to streamline their production process to reduce waste and increase productivity.
• Assess the existing processes and systems to identify any gaps or areas for improvement. Analyze data, conduct process mapping exercises, and gather feedback from stakeholders. For instance, a logistics company may realize that their current inventory management system is causing delays and errors in their supply chain. They conduct a thorough assessment to flag the specific areas that need improvement.
• Select an appropriate operations control system that aligns with their requirements. The chosen system must integrate seamlessly with the existing technology infrastructure, be scalable, and easy to use. For instance, a retail business may choose to implement a cloud-based operations control system that can easily integrate with their existing point-of-sale system and inventory management software. The new system can effectively track sales, manage inventory, and provide real-time data for decision-making.
• Develop an implementation plan, including timelines, resource allocation , communication strategies, training, and change management initiatives. For example, a healthcare organization implementing a new operations control system for patient scheduling may need to provide training to staff members on how to use the system effectively. They may also need to communicate the benefits of the system to patients as well.
• Regularly review and evaluate the performance of the operations control system, and seek feedback from employees and stakeholders. For instance, a hospitality company implementing an operations control system for managing hotel bookings may regularly review customer feedback and monitor key performance indicators. They can then make necessary adjustments and enhancements to continuously improve efficiency and customer satisfaction.

Overcoming Challenges in Operations Control System Implementation

While implementing an operations control system can yield significant benefits, organizations may encounter challenges along the way. Some common challenges include resistance to change, data integration issues, and the need for skilled resources. 

• Resistance to change: A financial institution implementing an operations control system for fraud detection may face resistance from employees who are accustomed to manual processes. By clearly communicating the benefits of the system, such as increased accuracy and efficiency, and involving employees in the decision-making process, the organization can address resistance and gain buy-in from the staff.
• Data integration issues: A telecommunications company implementing an operations control system for network monitoring may need to work closely with their network equipment vendors and IT teams to verify that the system can effectively collect and analyze data from various network devices.
• Need for skilled resources: A transportation company implementing an operations control system for route optimization may need to provide training to their logistics team on how to effectively use the system and interpret the data it provides. This guarantees that they can fully leverage the capabilities of the system and achieve the desired efficiency improvements.

Future Trends in Operations Control Systems

As the pace of technological advancements accelerates, operations control systems are poised to undergo significant transformations. With the advent of Internet of Things (IoT) devices, artificial intelligence, and big data analytics, these systems will become increasingly sophisticated and capable of handling vast amounts of data in real-time.

Furthermore, emerging technologies such as machine learning and predictive analytics will enable operations control systems to anticipate issues, automate decision-making processes, and optimize operations proactively. This will result in even greater efficiency gains and improved business outcomes.

Predicted Developments in Operations Control Systems

In the near future, operations control systems are likely to become more interconnected and integrated with other systems within organizations. This integration will enable seamless data sharing and collaboration, resulting in a more holistic approach to managing operations.

Additionally, the use of mobile devices for accessing and controlling operations control systems is expected to become more prevalent. This will provide businesses and employees with greater flexibility and accessibility, allowing them to monitor and manage their operations on the go. Lastly, the integration of operations control systems with advanced technologies such as blockchain will enhance the security and transparency of data, increasing trust and facilitating more efficient supply chain management.

Explore Operations Control Systems with Wrike

Operations control systems can enhance efficiency. With Wrike, you can explore and implement effective operations control systems. Wrike allows you to create individual folders for each control system initiative, serving as a central hub for all relevant information and updates. Beyond just exploring operations control systems, Wrike offers a comprehensive suite of tools designed to streamline your workflows, foster collaboration, and drive productivity. From real-time communication to intuitive task management features, Wrike provides everything you need to explore operations control systems for enhanced efficiency. Ready to explore operations control systems and boost your efficiency? There's no better time to start than now. Get started with Wrike for free today.

Note: This article was created with the assistance of an AI engine. It has been reviewed and revised by our team of experts to ensure accuracy and quality.

Occasionally we write blog posts where multiple people contribute. Since our idea of having a gladiator arena where contributors would fight to the death to win total authorship wasn’t approved by HR, this was the compromise.

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This tool can also show the different stages of the process, such as assembly, quality control, and packaging.  Swimlane diagrams Swimlane diagrams, also known as cross-functional flowcharts, illustrate the steps in a process across multiple departments or functions. This type of diagram is particularly useful for identifying areas where communication and coordination between departments can be improved. Swimlane diagrams use horizontal or vertical lines to separate the different departments or functions involved in the workflow. A swimlane diagram can be used to depict the steps for hiring in a company. The diagram illustrates the different departments involved in the process, such as HR, hiring managers, and finance.  Business process model and notation (BPMN) diagrams BPMN diagrams are a standardized form of workflow diagram used to portray complex processes. These diagrams use specific symbols to define the different types of tasks, decisions, and events that make up a process. BPMN diagrams are particularly useful for modeling business processes that involve multiple departments or functions. A BPMN diagram can be used to illustrate the order-to-cash process in a company. The diagram can show the different tasks involved in the workflow, such as order entry, invoicing, and payment processing.  Data flow diagrams (DFDs) DFDs are used to represent how data flows through a system or process. These diagrams are particularly helpful when identifying data sources, storage, and transformations. Also, DFDs are quite useful for modeling complex systems that involve multiple data sources and transformations. For instance, a DFD can be used to explain the flow of data in a customer relationship management (CRM) system. The diagram can show how data flows from customer interactions to the CRM system, and how it is stored and used to inform business decisions. Try Wrike for free How to create effective workflow diagrams Creating an effective workflow diagram requires careful planning and attention to detail. In this section, we’ll explore some key steps to take when creating a workflow diagram that accurately reflects your process and is easy to understand. 1. Identify the scope Before you create a workflow diagram, determine the scope of the process you’re trying to document. This includes the boundaries of the process, what data is being used, and who the stakeholders are. By doing so, you’ll be able to create a diagram that accurately reflects the workflow and provides value to stakeholders. When diagramming a workflow for a customer service process, you’ll need to identify the different stages of the process. This involves initial contact, issue resolution, and follow-up. You’ll also need to determine the data that’s being used, such as customer information, issue details, and resolution status. Finally, you’ll need to identify the stakeholders involved, such as customers, customer service representatives, and managers. 2. Gather relevant information Once you’ve identified the scope, the next step is to gather relevant information about the process. This may involve speaking to stakeholders, gathering data, and documenting existing procedures. The goal is to create a more accurate and detailed workflow diagram. You may need to interview customer service representatives to understand how they handle different types of issues. You may also gather data on the average time it takes to resolve issues and the most common types of problems that arise, or document any existing procedures. 3. Choose the right diagram type When selecting a diagram type, it’s important to choose one that accurately reflects the process you’re documenting. Consider the level of detail required, who the audience is, and what the purpose of the diagram is when making your decision. If you’re creating a workflow diagram for a complex process with multiple decision points, you may want to use a BPMN diagram. This type of diagram uses standardized symbols and notations to represent different types of actions and decision points, making it easier to understand and analyze the process. 4. Use standard symbols and notations Standard symbols and notations make your diagram easily understandable and accessible for all team members and stakeholders. There are a number of established symbols and notations that are used in workflow diagrams, including those in BPMN diagrams. For example, while a rectangle is commonly used to represent a process step, a diamond typically stands for a decision point.  5. Ensure clarity and simplicity Finally, it’s important to make your diagram as clear and easy to understand as possible. Consider using a logical flow and avoiding too much detail or complexity. Focus on the key steps in the process and ensure that the connections between them are clear. You may want to use color coding or different line styles to symbolize different types of actions or decision points. Annotations or comments would also suffice to provide additional context or information about specific steps in the process. Whether you’re documenting a customer service process, manufacturing process, or any other type of process, it pays to create a well-designed workflow diagram that can help you identify inefficiencies and improve overall performance. How project management tools streamline workflow diagrams Project management tools assist teams in collaborating, sharing, and accessing visual representations of workflow diagrams. These tools provide a central platform for working together effectively. They enable real-time updates and version control, ensuring that everyone is on the same page and that changes to the workflow can be efficiently managed.  Moreover, they often integrate task assignments, notifications, and progress tracking, simplifying the execution of each step in the workflow. Use Wrike as your workflow management software Wrike has proven to be an invaluable solution in the quest for efficient workflow management, particularly when it comes to implementing and visualizing workflow diagrams. Wrike helps users easily make, monitor, and enhance workflow diagrams with its user-friendly interface and numerous features. Its intuitive drag-and-drop functionality allows teams to design intricate diagrams with ease, ensuring that every step in their processes is clearly defined and organized. The real-time collaboration features enable teams to work seamlessly, whether they’re in the office or working remotely. Additionally, Wrike’s automation capabilities help streamline repetitive tasks, making workflows more efficient. Overall, Wrike can enhance workflow diagrams and drive productivity across the board. Conclusion Workflow diagrams are essential tools for effective process management, helping businesses streamline operations, reduce errors, and improve communication. Whichever diagram you choose, it’s important to select the right type for your needs and ensure that it accurately reflects the process you’re documenting. Empower your organization with intelligent workflow diagrams by harnessing the power of Wrike’s work management platform. Begin your free trial now and optimize workflows for elevated business performance. Try Wrike for free Note: This article was created with the assistance of an AI engine. It has been reviewed and revised by our team of experts to ensure accuracy and quality.

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Operational Planning

Operational planning definition.

What does operational planning mean? Operational planning creates a detailed roadmap based on a strategic plan. The operational plan aligns timelines, action items and key milestones that finance or the business needs to complete to execute on the strategic plan. In this way, an operational plan outlines the organization’s key objectives and goals and clarifies how the organization will achieve them.

During the operational planning process, finance or the business responsibilities are described in detail based on the timeline for the operational plan. The timeframe should depend on typical organizational velocity; creating an annual operational plan is a fluid, changing process, so keeping clarity and collaboration is vital for success.

A well-conceived business operational plan keeps team members collaborating smoothly, ensures everyone knows what needs to be done and what their part in it is, and guides critical decisions about long-term strategy.

Key steps of operational planning

• Define the goal or vision for the operational plan clearly
• Analyze and identify key business stakeholders, resources and budgets team members, budgets, and resources
• Consistently track and inform team members and stakeholders on progress
• Adapt the operational plan to wider company goals as needed

What Is Operational Planning?

Operational planning faqs.

What is operational planning for finance or the business? Operational planning is the result of a team or department working to execute a strategic plan. It is a future-oriented process that maps out department goals, capabilities, and budgets to promote the success of team-based activities designed to support the strategic plan.

Operational business plans are most effective when there is buy-in from the entire team or department, ensuring issues are reported, goals identified and timelines get delivered,, and business collaboration is more effective. When communication across finance and the business exists, operational plans work even more efficiently to ensure that the entire organization reaches its goals.

An example of operational planning would be a manufacturer creating a plan to increase revenue by 30%. Finance partners with sales, the marketing team, operations and other key business areas to align on the strategies needed to support revenue growth and achieve business goals together. Another operational planning example might be a brand looking to introduce a new product. It would need to leverage and expand existing capabilities, harness new tools, and create a roadmap for doing so.

Other operational planning examples in management include mapping business or production output to meet other new goals, planning for new or expanded solutions, sales and operational planning, providing a roadmap or increased clarity surrounding business goals, or creating a strategy for increased business partnership.

Strategic Planning vs Operational Planning

There is a difference between strategic planning, tactical planning, and operational planning. However, strategic, tactical, and operational planning need to be considered together and build upon one another.

What is a strategic plan?

A strategic plan describes the high-level goals, long-term vision, and organizational mission, usually over the next three to five years. It also details the major projects or initiatives that will happen to meet them, and how the organization will measure the goals, broadly. This is a big picture view of goals, but it can’t really show a team how to achieve those goals step-by-step.

What is an operational plan ?

An operational plan (also known as an operations plan, work plan, or operation plan) is a detailed outline of what a team or department will focus on in the immediate future—typically within the upcoming year. The operational plan answers questions about things like weekly goals and tasks, such as what they are generally, what they will achieve, who will do them, and how often.

What is a tactical plan?

Tactical planning is a step organizations or teams sometimes take after they create strategic and operational plans. The idea is to break the plans into smaller goals and objectives, to define them and determine which steps and actions will be most effective in achieving them. In other words, the operational plan may just have set a goal or task for person A about goal 1, but a tactical plan might set forth the detailed steps person A will need to execute every week.

Tactical planning and operational planning differ in the kinds of questions they ask. Operational plans ask how the team should do something so they can both adhere more broadly to the organizational mission and specific strategic goals. Tactical plans ask specific questions about how to accomplish strategic and operational goals. They are the most microscopic version of planning.

In summary, a strategic plan is a business-level, long-term strategy plan over the next three to five years. It is a visionary plan, the big picture. Its focus is not on implementation. An operational plan is smaller in timeline and both scope, and the goal of operational planning is both to describe a more granular view of how to achieve strategic goals and to focus on implementation in the form of weekly actions, specific Key Performance Indicators (KPIs), etc. A tactical plan is the narrowest view that is focused on implementation only, and things like daily tasks for one person or a small team and smaller goals.

Strategic and operational planning work together; operational planning is an important part of a whole strategy. Tactical planning helps teams achieve their strategic and operational planning goals.

The goal of an operational plan is to give particular tasks to specific departments, not the company as a whole, whereas it is strategic vs operational planning that sets forth long-term goals for the next three to five years.

What is the Operational Planning Process?

Going through the operational planning cycle, keep these best practices and operational planning techniques in mind.

Research and Identify Goals

The goal of an operational plan and its creation process should be to address some foundational questions:

• Start with the strategic plan: how will it shape the actions we take?
• What is the budget? How will it compare to previous years?
• What is the current status, considering budget, resources, and team members? What is the goal status in one, two, three years, etc.?
• How can the team practically achieve the goal? What operational planning methodology informs the approach? What are the operational planning tools we will use?
• What benchmarks should be used to assess our progress? They might include 5-star reviews, customer service cases closed, launch deadlines met, number of goods manufactured, new customers acquired, revenue increases, etc.

Ask team members the questions, and prioritize responses based on how difficult they are to execute, and how critical.

Visualize the Operational Plan

Make sure the vision for the plan is clearly articulated. Clearly defined goals, charts and visualizations, and project management software can help offer a high-level view of tasks and progress for all stakeholders. Identify which operational business planning techniques and tools will work best for achieving the organization’s goals.

Assign People and Budget

The budgeting process in operational planning consists of assigning tasks and allocating resources and budget for team members to complete them. Each piece of the budget should map out to a financial goal in the operational plan with corresponding timetables and deliverables.

Tracking and Informing Progress

Build out a reporting process that corresponds to the clear objectives with goals, targets, deliverables, resource allocation, and timetables in the operational plan. This way the stakeholders can report progress as the plan moves forward.

Adjust the Operational Plan as Needed

A well-conceived operational plan should allow you to understand precisely which activities and aspects of the plan failed to perform. This in turn allows the team to pivot, involve new team members as needed, and continue to the next benchmark with a refined operational plan.

Consider the Right Indicators

Use key performance metrics or indicators that are predictive, not just lagging indicators. You need some lagging indicators such as past sales or attendance figures, but leading indicators such as market trends should also contribute to both reporting progress and adjusting the operational plan.

What Should Operational Planning Include?

Approaches to operational planning vary, but each team has as its main objective producing a functional operational plan that reflects a practical approach to the organization’s mission and strategic plan.

What should an operational plan include? This strategic document should plan all of the daily processes and operations that a business and its teams or departments including marketing, recruitment, and finance need to do to achieve company goals.

A well-defined operational plan should ensure that each manager and employee understands what their specific responsibilities are, and how and when to execute them.

The operation plan itself should have several components:

• A title page. This summarizes the operational plan.
• An executive summary. This provides a few sentences with a rough idea of the overall plan and its basic sections.
• Mission and objectives. This section defines the organization’s broader mission and objectives. It also describes goals and milestones for the coming year that relate to the operational plan.
• KPIs. Evaluate metrics and KPIs that will measure results.
• Financial summary. This offers an overview and a financial breakdown of all projects included in the operational plan to demonstrate there is sufficient capital to execute the plan.
• Hiring plan. Determine how many monthly/quarterly team members to hire across different departments.
• Key assumptions and risks. Provide this risk analysis so mitigation can be performed.
• Next steps. Suggest next steps, if any.

What are the Steps in Operational Planning?

The purpose of the operational planning process is not to generate new goals or plans, but to create an operational plan in support of existing strategic goals:

Start with a strategic plan

Create the strategic plan first. Before considering immediate tasks and day-to-day details, it’s important to see the long-term vision and goals. As the leadership team creates the strategic plan, they determine the position of the organization and develop its strategy. They should also monitor the strategic plan, and adjust it as needed.

Sharpen the scope

Narrow the scope of the operational plan to a department, team, or focus area to ensure it is detail-oriented and targeted. The size of the organization determines the scope of your operational plan. In other words, you start big with the strategic plan, and then narrow down to the operational plan and the focus area of the team who will execute it—and then create various supporting action plans for execution.

Identify key stakeholders

Identify stakeholders in the operational planning process before creating an operational plan. The team members who create the operational plan should lead and inform others around the operational plan, so you’ll need to know who they are before execution.

Create the operational plan

Your operational plan sets forth the timeframe, the goals to achieve, and explains the actions the team will take to achieve those goals on time. It must include objectives, deliverables, quality standards (if any), desired outcomes, operating budget, staffing and resource requirements, and progress and monitoring information.

For example:

An organization’s strategic plan sets forth the goal of the marketing team increasing brand awareness by at least 10% in the next year. This will mean increased engagement with potential customers and more eyes on new marketing materials.

This will require support from the design team, who will have new goals: update the website and create new promotional materials. To achieve those goals, they will collaborate with the development team on the update and hire social media engagement team members. The team will use software and management tools to report and track their progress.

Share the operational plan

Share the operational plan with key stakeholders so they understand mission critical goals and the daily tasks that support them. Track progress in real-time for best results. This also allows you to update the operational plan and report on progress as needed to team members and stakeholders. Like project planning, operational planning is never a one-and-done task, but remains a continuous process.

Why is Operational Planning Important?

At the organizational level, project success demands a strong operational plan. Chaos and confusion often reign without an operational plan, as budgets rise and team members lose sight of tasks and deadlines.

The importance of operational planning is in the creation of a single source of truth that enables comprehensive understanding of mission, strategic goals, and how to achieve them. An operational plan helps teams identify areas that cause lack of clarity, missed revenue generation opportunities, inefficient strategies, or areas of reduced business partnership.

What are the Benefits of Operational Planning?

The advantages of operational planning can impact organizations of any size. An operational plan helps teams reach strategic goals by connecting teams and their individual tasks to company goals. A detail-oriented operational plan has many benefits.

It clarifies organizational goals. Operational planning helps leadership define responsibilities, daily tasks, and activities in detail. It also sets out how individual team members support overall department and organizational goals and defines outcomes for them to measure daily tasks against.

It also boosts team productivity. Operational planning enhances efficiency, productivity, and profits by ensuring employees in each department and across the company know their daily responsibilities and objectives.

Operational planning disadvantages include creating an operational plan based on human error, or whose success is overly dependent upon effective coordination of diverse cross-functional teams. Singular focus only on coordination and not connecting the business is a primary disadvantage of implementing an operations planning process.

Who is Responsible for Operational Planning?

Create an operational plan at the department or team level to best precisely capture the roles and tasks. At a larger organization, an operational plan might even be specific to a particular initiative—much like a detailed tactical or work plan.

There several considerations that determine who creates operational plans:

• Scope. For every activity, the operational plan includes the who, what, and when and must be laser-focused on the initiative itself and the team. Watch to ensure scope is not too broad.
• Timeline. An operational plan should cover a quarter, six months, or a fiscal year, depending on organizational speed and velocity.
• Stakeholders. To accurately predict what work to include in the plan, ensure operational planning stakeholders stay close to the work. Finance must unit the business from tactical details to strategic execution.

Typically, the operational plan is the realm of middle-management, in contrast to the top-down execution style from the C-suite the strategic plan receives. Its scope is also narrower and as routine tasks are mapped out, which continuously evolves Changes to the strategic plan will be less frequent.

Given the focus on day-to-day activities, allocation of resources, and tasks, middle-managers are often best-suited to map out and implement the operational plan.

Does Planful Help With Operational Planning?

Yes. Planful’s financial performance platform unites the demand for structured planning originating in finance with the business need for dynamic planning. Planful empowers organizations to make smarter decisions more confidently, rapidly, and strategically and ensures the data collection process for operational planning isn’t a time-consuming, manual process.

Use Planful to build collaborative financial plans that align resources with strategic objectives. Adjust and pivot as business conditions change, model hundreds of different scenarios reliably, and turn annual plans into quarterly or monthly rolling forecasts, all based on what the organization needs now.

Find out more about Planful’s Operational Planning solution here.

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A Framework to Design an Effective Operations Strategy

Erica Golightly

Senior Writer

December 12, 2023

Why do some companies align on strategic priorities and operate at peak efficiency while others have a stockpile of unsuccessful projects? 

The short answer is the shelf life of an operations strategy hinges on day-to-day implementation.

In a 2023 ClickUp global survey of hundreds of business leaders, 35% of respondents said operational efficiency is their top focus for business success. This is a call to action for Outcome Champions—operations management professionals coordinating resources, processes, and people to achieve operational excellence. ✨

The fundamental question to ask before taking any steps is a two-parter: What are your organization’s logistical and culturally relevant strategies, and how do you sustain a best-in-class partnership between all leadership levels and teams for success? 

Building strategies isn’t just about solving problems. Instead, it should leverage the capabilities of technology and build a workplace that removes fear-based opinions about trying new ideas. And that type of innovation is fuel for both strategic work and production .

• Types of operations strategies

Step 1: Define what the operations strategy will impact or transform 

Step 2: identify and secure the essential resources required for successful strategy execution, step 3: co-create an action plan to secure the flow of materials, information, and resources, step 4: leverage technology and be the driving force behind the strategy’s implementation, step 5: set checklists and decision rules for continuous improvement.

What is an Operations Strategy?

Operations strategy is the actionable plan that guides how a company manages its processes and resources in alignment with its overarching organizational goals. These processes involve the production and delivery of products or services that the company offers. 

Beyond the jargon, there’s a concept that molds a workplace’s culture, productivity, and business goals. Any company—small, mid, and large—does this to fit what they’re doing, where they’re doing it, and how they want to be different from others in their field.

While it could be perceived as an overlap with strategic planning , there is a distinction to be mindful of as we explore this guide: Strategic planning sets the overall vision and direction for the organization, often done annually or semi-annually. The operation’s main goals describe the processes and workflows that will be used to complete the work. ⚙️

Let’s take a look at operation strategy examples of specific functional areas within the organization:

Types of operations strategies for improvement, efficiency gains, and innovation

These operations strategies are not mutually exclusive. And this is good news! No one wants to be locked into a single business strategy. An integrated approach lets organizations optimize their operations for different products/services, customer segments, and markets. 🎯

When an organization invests in operations strategy and implementation, it invests in employee productivity. With a direct line of sight to the why and how behind their tasks, they aren’t forced to navigate high levels of ambiguity.

Instead, they are prepped with clear instructions to complete the right tasks. 

If you’re eager to begin process mining and outline your operational objectives right now, download the Operational Plan Template by ClickUp . It’s time to declutter your mental garage to make space for exciting, growth-oriented projects.

Extend invitations to your nearest collaborators and organize a systems architecture workshop, whether in real-time or asynchronously! 📧

So far, we’ve learned the inner workings of an operations strategy. Let’s see this in practice.

How to Build the Elements of an Operational Strategy Into Project Plans

This compact guidebook is built for an operations manager to implement the best core business processes and workflows into project plans. 

So, why is this guide compact? Disclaimer: We’re all in the same sitcom but reading different scripts. While there are business models and industries we can sort ourselves into, every company has a different set of core values that reflect its purpose and guiding principles. 

For this reason, the systems you’ll read below are the key success factors all operational strategies need. Teams can reach their peak performance by putting just one insight into action!

Think short-term perspective (competitive priorities) and long-term vision (trade-offs). 

Short-term planning meets immediate customer requirements, helps allocate resources at the right place and time, and provides benchmarks for evaluating team performance.

Long-term planning allows organizations to invest in modern technology solutions, guide market expansion opportunities, and redesign logistics. 

Your operational plan should have a narrower scope and be concerned with the day-to-day activities and actions necessary to implement the strategic plan . The key to securing leadership approval and support is articulating your plan’s value, feasibility, and alignment.

This is where co-creating easily measurable KPIs with teams and all levels of leadership is essential to provide each team member with a sense of ownership in their tasks. 🔑

Putting together a task force for the operations strategy is a group effort, especially when partnering with other teams. Collaborators in finance, marketing, human resources, and more will help fill knowledge gaps and advocate for enhancing efficiency , reducing costs, and delivering greater value.

Every department has business-as-usual tasks that keep the ship moving. If your operations strategy requires a significant chunk of time, there needs to be conversations with department leads about the best approach to minimize disruption. 💬

Because operation managers have a complex and multifaceted role, these discussions are teachable moments to influence the outcome of projects. 

Three valuable tools—capacity planning, resource planning, and process mapping—will take the guesswork out of this step. 

• Capacity planning gives visibility into whether you have enough company resources to meet the demands of a project’s needs
• Resource planning answers the question: What projects are our resources currently working on?
• Process design mapping outlines the sequence of events, tasks, and activities involved in a business process

This action plan will take multiple rounds to finish, but it won’t be complete even then because priorities may evolve as circumstances change. The best safeguard for transparency in any shift in the strategy is having a single source of truth to revisit and make micro-adjustments. ⚖️

The contents of your action plan will vary based on your company’s business model and operational processes. At minimum, the contents of your action plan document should include: 

If it feels as if the universe gets bored and starts making things happen on its own because it takes you over a week to draft an action plan, try ClickUp AI . We’ve covered you with 100+ tools that use research-based prompts tailored to specific roles! 🤖

Are teams feeling comfortable sharing their ideas, concerns, and feedback? Is there a rise in delayed projects because of a lack of accountability? Are team members asking, “What should I do today?”

Your leadership, communication, and problem-solving skills are essential to the operation strategy’s success. Because you’re working between different teams, you’ll have to organize assorted information that’s coming at you from different channels. 👨‍💻

You’ll need the right task management container to set everyone up for success and communicate expectations for executing projects. If you think the action plan you wrote in step 3 will be “good enough,” consider this: 

Managing tasks through a static action plan can overwhelm larger teams or complex projects. There’s too much noise and clutter to scroll through daily. Dedicated task and project management software sets the stage for individual and team productivity at scale.

Manual models can’t keep up with the demands of an agile workforce, and being agile is a non-negotiable in today’s marketplace as industry-tailored AI use cases continue to grow. Your time and attention should be spent on high-value tasks and activities that move teams closer to their goals.

Take a quick water break, then download the Daily Action Plan Template by ClickUp . This template has all the ingredients to organize task assignments, milestones, deadlines, and contributors. 

As ClickUp users, your teams and stakeholders have all the tasks and documentation within reach to monitor progress closely throughout the implementation phase!

Warning: The hidden costs of shortcuts

It’s easy to underestimate the impact of small, seemingly mundane tasks that accrue over time. However, these “save for later” tasks can quickly snowball into a significant team problem. 

Let’s take a closer look at the hidden costs of shortcuts: 

• Workplace cultural debt : Workplace cultural debt refers to the negative consequences of neglecting the company’s culture and core values, like low employee morale, high turnover, and decreased productivity, which can harm their long-term success
• Technical debt : Technical debt arises when software or technology solutions are developed quickly or with suboptimal coding practices to meet immediate needs
• Process debt : Process debt refers to accumulating inefficiencies and shortcomings in an organization’s workflows and procedures over time
• Knowledge debt: Knowledge debt occurs when organizations fail to invest in continuous learning and development for their employees

Tackling any debt is a team effort. Here are a few quick methods to pull out of your productivity toolbox and tackle small tasks for minimum impact on your production initiatives: 

• Prioritize tasks : Prioritize tasks using the Eisenhower Matrix (urgent and important tasks come first, followed by important but not urgent ones)
• Team session blocking : Schedule focused time blocks for small tasks, avoiding multitasking to minimize distractions
• Task batching : Group similar tasks together and address them in batches to reduce context-switching
• Delegate when appropriate : Delegate action items and tasks that others on your team can handle

Now, back to our regularly scheduled program! 🎬

Considering that other routine tasks and special projects are running simultaneously in your workload, how do you maintain group momentum in the operations plan?

Begin with questions to help the operations management team systematically gather and analyze data on a centralized dashboard. This will reduce cognitive burden and allow team members to make confident decisions. 

These checklists and rules can be as detailed as you need them to be for internal use. If it helps to assess their true usefulness, run it through a beneficiary test. Give them to project leads, stakeholders, and senior leadership to confirm whether or not they’re focusing on the right questions to evaluate day-to-day implementation. 📊

So, how can operations managers apply checklists and decision rules on a tactical level when they’re up against tight timelines? 

Deliver a consistent experience to your team with a scheduled routine. 

Here’s a breakdown of operational strategy tasks at intervals. Is there anything you notice that can be added to your personal or team schedule? 🗓️

What’s Next?

With your newly acquired operations strategy framework in hand, apply it in the context of your company’s operations and processes . From supply chain management to software and everything in between, you’ll have the tools to coordinate even the toughest operations strategies. 💪

Lastly, if you’ve ever experienced fleeting progress in your responsibilities, it might be because you’re not focusing on the right things at the right time. It’s okay—no, it’s allowed —to ask your peers to challenge your observations when you get stuck. 

Count on the team at ClickUp as one of your peers, and reach out if you need help stepping out of a revolving door of unsuccessful implementation. Happy planning! ✍️

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How To Write the Operations Plan Section of the Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Stage of Development Section

Production process section, the bottom line, frequently asked questions (faqs).

The operations plan is the section of your business plan that gives an overview of your workflow, supply chains, and similar aspects of your business. Any key details of how your business physically produces goods or services will be included in this section.

You need an operations plan to help others understand how you'll deliver on your promise to turn a profit. Keep reading to learn what to include in your operations plan.

Key Takeaways

• The operations plan section should include general operational details that help investors understand the physical details of your vision.
• Details in the operations plan include information about any physical plants, equipment, assets, and more.
• The operations plan can also serve as a checklist for startups; it includes a list of everything that must be done to start turning a profit.

In your business plan , the operations plan section describes the physical necessities of your business's operation, such as your physical location, facilities, and equipment. Depending on what kind of business you'll be operating, it may also include information about inventory requirements, suppliers, and a description of the manufacturing process.

Keeping focused on the bottom line will help you organize this part of the business plan.

Think of the operating plan as an outline of the capital and expense requirements your business will need to operate from day to day.

You need to do two things for the reader of your business plan in the operations section: show what you've done so far to get your business off the ground and demonstrate that you understand the manufacturing or delivery process of producing your product or service.

When you're writing this section of the operations plan, start by explaining what you've done to date to get the business operational, then follow up with an explanation of what still needs to be done. The following should be included:

Production Workflow

A high-level, step-by-step description of how your product or service will be made, identifying the problems that may occur in the production process. Follow this with a subsection titled "Risks," which outlines the potential problems that may interfere with the production process and what you're going to do to negate these risks. If any part of the production process can expose employees to hazards, describe how employees will be trained in dealing with safety issues. If hazardous materials will be used, describe how these will be safely stored, handled, and disposed.

Industry Association Memberships

Show your awareness of your industry's local, regional, or national standards and regulations by telling which industry organizations you are already a member of and which ones you plan to join. This is also an opportunity to outline what steps you've taken to comply with the laws and regulations that apply to your industry. 

Supply Chains

An explanation of who your suppliers are and their prices, terms, and conditions. Describe what alternative arrangements you have made or will make if these suppliers let you down.

Quality Control

An explanation of the quality control measures that you've set up or are going to establish. For example, if you intend to pursue some form of quality control certification such as ISO 9000, describe how you will accomplish this.

While you can think of the stage of the development part of the operations plan as an overview, the production process section lays out the details of your business's day-to-day operations. Remember, your goal for writing this business plan section is to demonstrate your understanding of your product or service's manufacturing or delivery process.

When writing this section, you can use the headings below as subheadings and then provide the details in paragraph format. Leave out any topic that does not apply to your particular business.

Do an outline of your business's day-to-day operations, including your hours of operation and the days the business will be open. If the business is seasonal, be sure to say so.

The Physical Plant

Describe the type, site, and location of premises for your business. If applicable, include drawings of the building, copies of lease agreements, and recent real estate appraisals. You need to show how much the land or buildings required for your business operations are worth and tell why they're important to your proposed business.

The same goes for equipment. Besides describing the equipment necessary and how much of it you need, you also need to include its worth and cost and explain any financing arrangements.

Make a list of your assets , such as land, buildings, inventory, furniture, equipment, and vehicles. Include legal descriptions and the worth of each asset.

Special Requirements

If your business has any special requirements, such as water or power needs, ventilation, drainage, etc., provide the details in your operating plan, as well as what you've done to secure the necessary permissions.

State where you're going to get the materials you need to produce your product or service and explain what terms you've negotiated with suppliers.

Explain how long it takes to produce a unit and when you'll be able to start producing your product or service. Include factors that may affect the time frame of production and describe how you'll deal with potential challenges such as rush orders.

Explain how you'll keep  track of inventory .

Feasibility

Describe any product testing, price testing, or prototype testing that you've done on your product or service.

Give details of product cost estimates.

Once you've worked through this business plan section, you'll not only have a detailed operations plan to show your readers, but you'll also have a convenient list of what needs to be done next to make your business a reality. Writing this document gives you a chance to crystalize your business ideas into a clear checklist that you can reference. As you check items off the list, use it to explain your vision to investors, partners, and others within your organization.

What is an operations plan?

An operations plan is one section of a company's business plan. This section conveys the physical requirements for your business's operations, including supply chains, workflow , and quality control processes.

What is the main difference between the operations plan and the financial plan?

The operations plan and financial plan tackle similar issues, in that they seek to explain how the business will turn a profit. The operations plan approaches this issue from a physical perspective, such as property, routes, and locations. The financial plan explains how revenue and expenses will ultimately lead to the business's success.

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Crafting An Operations Strategy to Streamline Business Operations

An effective operations strategy aligns your business operations with corporate strategy to optimize productivity, reduce costs, and gain competitive advantage. This comprehensive guide explores what an operations strategy entails, its key elements, types of strategies, development framework, and the multitude of benefits it offers. Read on to learn how to leverage operations strategy to boost performance.

Defining Operations Strategy and Its Vital Role

An operations strategy is a high-level, long-term plan for how a company will utilize its limited resources and organize essential business operations like production, distribution, supply chain management, inventory management, and quality control to achieve its strategic goals and support overall corporate strategy.

A robust operations strategy sets clear strategic priorities and objectives for critical operations functions, outlines detailed action plans to drive productivity and efficiency improvements, and helps build competitive capabilities through optimized workflows. It provides a roadmap for aligning operations with the business mission and objectives.

With volatile markets and rising customer expectations, having adaptive operations strategies to respond quickly and effectively is more important than ever. A company’s operations sit at the core of executing its business strategy and value proposition. An operations strategy allows you to run them smoothly, efficiently, and in synch with corporate needs. It is a vital component for business success.

Key Elements Comprising an Operations Strategy

An operations strategy consists of various interconnected components working in unison to enhance operational performance. Here are some of the integral elements that make up an effective operations strategy:

Strategic Alignment with Business Goals

The operations strategy must fully align with and complement the overarching corporate strategy. There should be tight integration and consistency between the priorities, objectives, and goals of these strategies across departments. This enables synergy between functions and seamless strategy execution.

Structural and Infrastructure Decisions

These decisions specify the layout, technology systems, facilities, equipment, supply chain structure, inventory management processes, automation levels, and key operational processes required to support the operations strategy. The aim is optimizing capacity flexibility, integration, productivity, and efficiency.

Process Improvement and Optimization Plans

The operations strategy will detail action plans to analyze, streamline, and improve key operating processes through techniques like process mapping, Lean, Six Sigma, automation, IoT, and other innovations to systematically boost productivity and efficiency.

Performance Metrics and KPIs

Relevant key performance indicators and metrics must be established to monitor operational performance versus objectives across functions like production, inventory, supply chain, quality, and distribution. The use of data and metrics enables fact-based decision making and continuous improvement.

Policies, Procedures, and Standards

Guidelines for decision making and execution across operations are established through documented policies, procedures, and standards pertaining to quality, safety, sustainability, inventory control, procurement processes, maintenance, food safety, and more.

Risk Management Plans

Potential risks like supply chain disruptions, demand forecast inaccuracies, changes in product strategy, production bottlenecks, and labor issues are addressed through mitigation tactics, flexibility, and contingency plans to minimize probability and impact.

Types of Operations Strategies

There are three primary types of operations strategies to choose from:

Cost Leadership/Efficiency Focused

This entails aggressively minimizing costs and maximizing efficiency across all operations and business activities. The focus is on standardizing streamlined processes, exercising tight cost control, exploiting economies of scale, and driving waste reduction.

Differentiation Focused

A differentiation focused strategy aims to produce unique or highly customized products through flexible, responsive, and innovative operations and supply chains. Delivering added-value for customers is prioritized over low operational costs. Agility and quality are emphasized.

Hybrid Model

A hybrid strategy pursues both operational efficiency and differentiation. The goal is to offer customized products rapidly and cost-effectively through innovation, strategic partnerships, and optimized processes. This requires excelling at both cutting-edge innovation and rigorous cost control.

The optimal operations strategy depends on factors like industry dynamics, company resources and constraints, operational capabilities, and target customer needs. Firms often evolve their operations models over time as conditions and strategic contexts change.

Why Have an Operations Strategy? The Benefits

Developing and implementing an aligned operations strategy offers many tangible benefits:

Competitive advantage - Optimizes operations for differentiation, cost efficiency, speed, quality, or flexibility to outperform rivals.

Cost reduction - Eliminates non-value-adding activities and maximizes productivity to significantly lower operational costs.

Quality improvement - Enables consistent product/service quality through standards, training, controls, and process discipline.

Risk management - Contingency plans prevent and mitigate supply chain, demand forecasting, and production risks.

Increased efficiency - Lean processes, strategic layout, automation, waste reduction, and streamlining boost efficiency.

Data-driven decisions - KPI monitoring provides visibility into operational performance to drive fact-based decision making and continuous enhancement.

Strategic alignment - Links operations projects and objectives directly to critical corporate strategy goals.

Innovation culture - Differentiation focused strategies drive new product, service, and process innovation.

Agility and responsiveness - Strategic flexibility enables adjusting operations swiftly to market changes and disruptions.

Customer satisfaction - Operations improvements enhance product quality, service levels, speed, reliability, and overall value to customers.

A tightly integrated operations strategy delivers streamlined workflows and strategic capabilities to execute business strategy successfully. It is foundational to operating excellence.

Framework for Developing an Operations Strategy

While each operation strategy must align to the business context, here is a general framework for developing an effective operations strategy:

1. Evaluate Overall Business Strategy

Thoroughly assess the current business strategy and determine what operational capabilities and processes will be critical for supporting the overall strategic goals both now and in the future.

2. Understand Current Operational Resources

Take stock of existing operational resources including staff capabilities, facilities, technologies, equipment, supply chains, inventory systems, and business processes. Identify strengths, weaknesses, constraints, and gaps.

3. Assess Operational Capabilities

Analyze core operational capabilities related to efficiency, flexibility, speed, quality, and more based on resources and competencies to determine competitive advantage.

4. Identify Improvement Areas

Based on the business strategy assessment and internal analysis, pinpoint areas of operations, processes, and capabilities needing enhancement to achieve strategic goals and address weaknesses.

5. Set Operations Objectives

Define specific, measurable short and long-term objectives for enhancing operations functions like production, inventory, procurement, quality, and distribution based on business aims and performance gaps uncovered.

6. Make Strategic Decisions

Make plans and decisions on operational structure, infrastructure, processes, policies, layout, partnerships, technologies, automation, standards, metrics, and more needed to realize the defined objectives per the operations strategy.

7. Create Implementation Roadmap

Map out detailed activities, resources, budgets, schedules, constraints, risks, KPIs, and implementation owners to activate the operations strategy through organizational projects and change initiatives.

8. Monitor, Evaluate and Refine

Once implemented, continuously monitor performance through KPI analysis. Use insights to regularly refine and adapt the operations strategy and implementation plans to evolving business conditions and needs.

This expansive framework encompasses everything from strategic analysis, to planning, to project implementation, to performance tracking for an agile operations strategy.

Key Components of an Effective Operations Strategy

Certain core principles and best practices help shape a robust, successful operations strategy:

Tight Strategic Alignment

The operations strategy must seamlessly align with and fully reinforce the direction of the corporate strategy and marketing strategy. Any misalignment with business needs leads to poor strategy execution.

Customer-Centric Outlook

An intense customer focus will optimize operations to deliver maximum value to customers - through improvements in cost, quality, speed, service levels, or experience. Customer pain points should actively guide strategy.

Efficiency and Productivity Imperative

The strategy should aim to continually maximize productivity and eliminate all forms of waste through techniques like process digitization, data-driven optimization, Lean methodologies, and automation technologies. Output and efficiency are enhanced relative to resource inputs.

Measurement, Data Analytics and Optimization

Extensive KPI monitoring, productivity metrics, process mining, statistical analysis, and optimization algorithms inform fact-based decision making by providing visibility into operational bottlenecks, deficiencies, and improvement areas to address.

Culture of Continuous Improvement

A culture focused on continuously improving and optimizing processes and productivity should be fostered across operations through Lean methodologies, staff training, and engagement of cross-functional teams.

Technology Utilization

Advanced technologies like IOT, predictive analytics, blockchain, robotics automation, and artificial intelligence are increasingly leveraged to enable integrated, intelligent operations and supply chains and drive innovation where possible.

Adaptability and Flexibility

Build capabilities to rapidly adapt operations, supply chains, layouts, and product mixes in response to evolving strategies, customer needs, disruptions, and market conditions through contingencies.

Aligning Operations and Corporate Strategy

Seamless alignment between operations and corporate strategy is crucial for companies. Here’s how integration enables execution:

The corporate strategy sets vision, objectives, competitive positioning. Operations outlines how to build capabilities to excel at executing this strategy.

Growth focused corporate strategies require operational expansions - adding capacity, capabilities, facilities, systems, and supply chains.

Differentiation requires operational agility, customization ability, flexible processes, speed, and innovation to deliver specialized value.

Cost leadership needs a keen focus on maximizing efficiency, driving waste reduction, Lean processes, automation, and economies of scale across operations.

Customer-centric strategies require operations enhance speed, quality, service levels, and experience through targeted improvements.

If risk mitigation is a corporate priority, operations develops contingencies for supply chain disruptions, demand variability, and scenario planning.

New products/markets require operational changes to production processes, layouts, skills, technologies, inventory, distribution models and supply chains.

This tight integration between operations and corporate strategy allows executing business strategy seamlessly. It also enables feeding performance data back to refine corporate plans.

Operations Strategy vs. Operations Plan

The high-level operations strategy sets a long-term vision and strategic objectives for optimizing operations and aligning them to business needs. An operational plan provides granular steps for executing the vision:

Operations strategy - Multi-year blueprint covering operational structure, processes, capabilities, resources, metrics, risks, and strategic objectives.

Operational plan - Detailed implementation plans to activate strategy - budgets, schedules, KPIs, process steps, constraints, specific initiatives, and projects. Has a 1-3 year time horizon.

While the strategy sets direction, the agile operations plan enables concrete execution through sequenced projects and change initiatives. An operational plan is essential for realizing strategy.

Key Takeaways for Developing An Operations Strategy

Key points to remember about creating an impactful operations strategy:

Must align business operations seamlessly to corporate strategy and goals

Addresses operational structure, processes, infrastructure, policies, risks, performance measurement, and capabilities

Choosing cost focus, differentiation focus, or a hybrid model depends on strategic context

Provides competitive advantage through strategic operational capabilities 

Requires thoroughly analyzing internal resources, constraints, gaps, and weaknesses

Sets clear operations objectives for alignment with corporate aims

Enables innovation, productivity, quality, cost savings, and customer satisfaction improvements

Requires a detailed implementation roadmap and performance tracking

Must evolve as business needs, constraints, and external environments change

Developing the right operations strategy provides a strategic foundation to transform business operations and execute corporate strategy powerfully. Streamlined processes, improved productivity, synergy across functions, and strategic integration enable operational excellence and competitiveness.

The time to optimize business operations and boost performance is now. Use the insights covered to start crafting an operations strategy tailored your specific business context and aimed at aligning and enhancing operations to accelerate success.

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• What is strategy implementation? 6 key ...

What is strategy implementation? 6 key steps to success

Strategy implementation is the process of turning your strategic plan into action. Whether you’re executing a new marketing plan to increase sales or introducing a new work management software to increase efficiency—your plan is only as valuable as the implementation. In this article, we cover the pitfalls of strategy implementation and how you can avoid them. Plus check out different frameworks associated with this process to set you up for success.

Having a strategic plan is great, but unless you have the bandwidth, resources, and support to implement your plan it’s not going to drive actual change in your organization.

We’re going to cover the key steps of strategy implementation, including potential pitfalls and how you can avoid them, and introduce you to a few frameworks to help you successfully implement any strategy you’re currently working on.

The 6 key strategy implementation steps

Before you can implement your strategy you need to create a strategic plan .

Your strategic or implementation plan outlines the steps your team or organization needs to take in order to achieve a goal or objective. Your implementation plan is the roadmap to a successful strategy execution and should include the following steps:

Define your goals

Conduct proper research

Map out any risks

Schedule all milestones

Assign tasks

Allocate helpful resources

Once your strategic plan is set, it’s time to get it on the road! There are six steps to follow on your way to a successful implementation.

Step 1: Set and communicate clear, strategic goals

The first step is where your strategic plan and your strategy implementation overlap.  

To implement a new strategy, you first must identify clear and attainable goals. As with all things, communication is key. Your goals should include your vision and mission statements , long-term goals , and KPIs . 

The clearer the picture, the easier the rest of your strategy implementation will be for your team and organization—simply because everyone will be working towards the same goals. 

Step 2: Engage your team

To implement your strategy both effectively and efficiently , you need to create focus and drive accountability. There are a few ways in which you can keep your team engaged throughout the implementation process:

Determine roles and responsibilities early on. Use a RACI matrix to clarify your teammate’s roles and ensure that there are no responsibility gaps.

Delegate work effectively . While it can be tempting to have your eyes on everything, micromanagement will only hold you back. Once you’ve defined everyone’s roles and responsibilities, trust that your team will execute their tasks according to the implementation plan.

Communicate with your team and ensure that everyone knows how their individual work contributes to the project. This will keep everyone motivated and on track.

Step 3: Execute the strategic plan

Allocate necessary resources —like funding for strategic or operational budgets—so your team can put the strategic plan into action. If you don’t have the right resources you won’t be able to achieve your strategic plan, so this should be a top priority. Here’s how you can ensure that your team has the resources they need:

Start with the end in mind to effectively align your project’s objectives, key deliverables, milestones, and timeline.

Identify available resources like your team’s capacity, your available budget, required tools or skills, and any other unconventional resources

Define a clear project scope so you know exactly what your project needs when.

Share your project plan with everyone involved in the implementation process using a work management tool.

The better built out your strategic plan is, the easier it will be to implement it.

Step 4: Stay agile

You’ll inevitably run into issues as you begin implementing your strategy. When this happens, shift your goals or your approach to work around them. 

Create a schedule so you can frequently update the status of your goals or implementation strategy changes. Depending on the strategy you’re implementing, you can create weekly, monthly, or quarterly project status reports . Share these updates with your external stakeholders, as well as your internal team, to keep everyone in the loop.

Having a central source of truth where you can update your team in real time will help you streamline this process. Asana’s work management software allows your team to coordinate projects, tasks, and processes in real time but also gives you the freedom to get work done asynchronously —providing everyone with the visibility they need to understand who’s doing what.

Step 5: Get closure

Once you implement the strategy, connect with everyone involved to confirm that their work feels complete. Implementing a strategy isn’t like a puzzle that’s finished when the last piece is set. It’s like planting a garden that continues to grow and change even when you think you’re done with your work.

Getting closure from your team will be the second to last milestone of your strategy implementation and is a crucial step toward completion.

Step 6: Reflect

Conduct a post-mortem or retrospective to reflect on the implemented strategy, as well as evaluate the success of the implementation process and the strategy itself. This step is a chance to uncover lessons learned for upcoming projects and strategies which will allow you to avoid potential pitfalls and embrace new opportunities in the future.

What you need to implement a strategy

No matter how well thought out your strategy is, you’ll need these five key components to successfully implement any strategy.

You’ll need a team that not only understands the strategy you want to implement but also has the skills and bandwidth to support you. Appoint, hire, and train the right people for the job and ensure that the competencies needed to succeed are present in your project team.

Asana’s Customer Success team was invaluable to our implementation process. They took the time to understand our business and showed us how to create practical workflows and processes to get the most out of Asana. We couldn’t have done it without them.”

Effective resource allocation is one of the most important parts in strategy implementation. Resources can be both financial (e.g., cost of labor) and non-financial (e.g., time to implement strategy).

Organization

Everyone in your organization needs to know what their responsibilities are so they can be accountable for their part in implementing the strategy. This also means that the chain of command has to be defined and communicated so everyone knows who to communicate with during the implementation process.

The tools, capabilities, and systems you’ve put in place are another key component. You have to know what the functions of each of these systems are and how they will support your strategic management process during and after the implementation. 

The final key component is the organizational culture within your company. Rolling out new strategies can be confusing and stressful for teams. Ensuring that everyone knows what they need to know and feels valued and included is crucial for a successful and effective implementation.

McKinsey’s 7S framework

McKinsey & Company is a world-renowned management consulting firm that, among other things, created a framework of seven factors needed to implement a strategy successfully.

The factors can be split into hard elements (strategy, structure, and systems) and soft elements (shared values, skills, style, and staff). While the hard elements are easy to identify and influence directly, the soft elements are less tangible and typically influenced by the company culture versus a manager or other direct contact.

Let’s take a quick look at the McKinsey 7S Model, beginning with the hard elements:

Strategy: Your organization’s plan to establish or maintain a competitive advantage over others in the field

Structure: Your company’s organizational structure

Systems: The day-to-day procedures and activities performed by your teams

These are the soft elements of the framework:

Style: The leadership style in your organization

Staff: Your team and their general capabilities

Skills: Your team’s competencies and skills

Shared values: Your organization's core values

You can apply this framework to your strategy implementation process by looking at your organization’s shared values first and ensuring that they align with your hard elements. Next, identify how well your hard elements support one another and where changes could improve their interaction. After you’ve established that, do the same for your soft elements.

This analysis helps you identify elements that are working well and elements that need improvement. Applying this framework to your strategic plan and strategy implementation process helps you get a better feel for how well your organization can implement change.

The three Cs of implementing strategy

Business consultant and author Scott Edinger coined the three Cs of implementing strategy —clarity, communication, and cascade. They’re the three steps you should keep in mind if you want to implement your strategy successfully.

Let’s take a closer look at what they represent.

Clarify your strategy. Ideally, strategy was well received in the boardroom and your stakeholders and executives are on board. However, if it’s not clearly defined, you may lose your mid-level and frontline team members along the way. Your team can only implement a strategy they understand, so be clear with what your goals and strategic objectives are.

Communicate your strategy. A poster, announcement, or newsletter won’t be enough to communicate a new strategy to your organization. Diversify your communication strategy to ensure that teams know what’s going on and create opportunities to ask questions so everyone feels like they’re part of the process.

Cascade your strategy. A well implemented strategy cascades through your entire organization. Involve your organization’s managers and ensure that they understand the strategy so they can forward relevant information, tactics, and processes to their teams. While you may have informed your organization during the communication stage, this step is crucial in aligning every last teammate with your new strategy.

Next, let’s have a look at some of the challenges you’ll encounter during strategy implementation.

Strategy implementation pitfalls and solutions

A big undertaking like the implementation of a new strategy comes with its fair share of obstacles. Below are four of the most common pitfalls you’ll encounter when implementing a strategy plus a few tips on how you can create solutions for your team. 

1.  Overwhelming or meaningless strategic plan

Problem: If the strategic implementation lacks meaning and potential or if there is an overwhelming number of puzzle pieces to consider, it can really put a wrench in your implementation. 

Solution: Use SMART goals to ensure that your strategic plan is specific, measurable, achievable, realistic, and time-bound. This framework will ensure that your strategic plan is both meaningful and possible to implement.

2. No implementation in sight

Problem: It’s great to have a strategic plan but without the resources and support from upper management, the implementation may never happen.

Solution: Your strategic plan should include clear goals, consequences, and requirements to inspire the actual implementation of your strategy. The clearer the document, the easier it will be to get the resources needed to turn it into action.

3. Lack of communication and ownership

Problem: A team that’s not 100% sure what the strategy actually is and doesn’t feel confident about their respective tasks can make your implementation process come to a halt before it’s even begun.

Solution: Clearly define each team member's responsibilities and delegate any relevant work. This gives team members a sense of ownership over the outcome of the strategy implementation. Ensure that your teammates have the authority and resources to execute their tasks.

4. Lack of accountability and empowerment

Problem: Low visibility and a lack of accountability can make your team feel helpless. 

Solution: Schedule regular strategy review and team meetings to discuss each team member’s progress, issues that are arising, and strategy shifts that can contribute to the success of your implementation. Track the progress to give your team a sense of accomplishment whenever they check off another goal they’ve met.

As long as you’re aware of the challenges, you can tackle them head on and avoid unnecessary setbacks.

Plan, implement, celebrate

Change isn’t easy but in order for your team to grow, it’s crucial that your organization does too.

Whether you’re in the midst of developing your strategic plan with a small project team or you’re already communicating your strategy to the entire organization, reliable project management software is critical in ensuring that everyone has access to the resources they need.

And once the strategy is successfully implemented, don’t forget to give yourself and your team a pat on the back. After all, celebrating milestones like these is important too!

Sources: Harvard Business School | MindTools | OnStrategy

Related resources

Smooth product launches are simpler than you think

What is stakeholder analysis and why is it important?

How Asana uses work management to optimize resource planning

Understanding dependencies in project management

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5-step process to implement effective internal controls within an organization

Dec 02, 2021

Strengthen Internal Controls for Better Effective Control

Financial information, especially for medium-sized and large enterprises, contains valuable information which needs to be protected to avoid manipulation to strengthen internal controls . Internal controls management assists in meeting this requirement. By managing key accounting, operational, financial and compliance risks through internal controls implementation, firms can reduce their exposure to risk (internal risk assessment) and hence enable their management to efficiently run the business operations.

Internal controls are created based on organizational policies, procedures, practices and structure and they provide reasonable assurance that organizational objectives are achieved.

The IMPORTANCE of GOOD INTERNAL CONTROLS and AUTOMATING INTERNAL CONTROLS

The main objective of Internal controls is to prevent, detect and correct undesired events within an organization. Internal controls define what should be achieved and what should be avoided within an organization.

We give you a detailed analysis of the need for and importance of Internal controls implementation in any organization

CLASSIFICATIONS and COMPONENTS of INTERNAL CONTROLS

• Preventive Control: Preventive control prevent an error, omission, or malicious act from occurring. They predict potential problems before they occur and make the adjustments. Examples of preventive controls are Segregation of Duties, Approvals, Authorization and Verification.
• Detective Control: Detective control detects and reports an error, omission, or malicious act. Examples of detective controls are Review of Performance, Reconciliation, Physical Inventory and Audits.
• Corrective Control: Corrective control correct errors arising from a problem. Examples of corrective controls are Data Backups, Data Validity test, Management Variance reports, Training and Operations Manual.

In addition to the 3 categories of internal controls, there can be some other categories that need to be implemented during audits as mentioned below:

• Compensating Control: Compensating control compensate another control to minimize risk. Examples of compensating controls are maintaining and reviewing logs and audit trails where Segregation of Duties is not maintained.
• Deterrent Control: Deterrent controls attempts to discourage someone from taking an action. Examples of deterrent controls are lock, barricades, security guard and encryption.
• Overlapping Control: Overlapping controls are two strong controls where either control might be enough to check access, but the two complement each other. Example of overlapping controls is a Datacenter employs a card key system to control physical access and the security guard inside the door requires employees to show their identity card or key.
• Directive Control: Directive controls ensure that a desirable outcome is achieved. Example of directive controls are organizational policies, procedures, and guidelines.

CONTROL OBJECTIVES BENEFITS OF ORGANIZATIONAL CONTROL

Control objectives provide requirements to be considered by management to address risks that controls are designed to mitigate.

CONTROL MEASURE

A control measure is defined as an activity contributing to the fulfilment of a control objective.

GENERAL CONTROLS

General controls apply to several areas within an organization as mentioned below:

• Internal accounting controls
• Operational controls
• Administrative controls
• Organizational security policies and procedures to confirm correct usage of assets
• Controls that facilitate to confirm correct recording of transactions— transactional audit path
• Procedures and practices to confirm adequate safeguards over access to and use of assets and facilities
• Physical and logical security policies for all, Datacentres, and IT resources

INFORMATION SYSTEM SPECIFIC CONTROLS

Information System specific control includes the following:

• Strategy and direction of the IT domain
• General organization and management of the IT domain
• Access management of all IT resources
• Application programming, development methodologies and technical support functions
• Change Management domain
• Operations procedures
• Physical access controls
• Business Continuity Management in event of a disaster
• Network management
• Database administration
• Protection and detective mechanisms against threats and vulnerabilities within an organization

EFFECTIVE INTERNAL CONTROLS AND RISK MANAGEMENT IMPLEMENTATION

There is a five-step process that can be followed to implement effective internal controls within an organization:

Step 1: Establish an Appropriate Control Environment

The nucleus of any organization are its people and their individual attributes like integrity, ethics, and skill. They lay the foundation for an appropriate control environment within an organization.

Step 2: Internal Controls and Risk Assessment

Management should identify, analyze, and evaluate risks within an organization and ensure that measures, processes, and controls are considered reduce the impact of these risks to business function.

Step 3: Implement Control Activities

Control activities should be deployed in accordance with organizational policies and procedures that can mitigate risks within an organization. Then controls should be developed that can help in mitigating those organizational risks.

Step 4: Communicate Information

Control activities are encircled by information and communication systems, and they help to obtain and share the information needed to conduct, monitor, and control an organization. Information should be provided to the right people timely and in detail so that they carry out their responsibilities competently.

Step 5: Monitor

All controls should be monitored on regular basis and modified if necessary. An organization can take help of Auditors and reviewers in monitoring controls. Periodic review of internal control should be performed to ensure controls are operating in accordance defined risk control matrix, and compliance of internal processes . All documentation obtained for selected samples should be reviewed and followed up to ensure that any identified problems are corrected.

BENEFITS OF INTERNAL CONTROLS IMPLEMENTATION

Some of the benefits of an effective internal controls implementation are:

• Help protect assets within an organization by reducing the possibility of fraud
• Enhance operational efficiency within an organization
• Enhance financial reliability and integrity within an organization
• Ensure legal and statutory compliance with laws and regulations within an organization

A successful approach to implementing internal controls management should encompass defining the right outcomes for the organization, ensuring appropriate governance; and incorporating internal controls considerations ( strengthen internal controls ) into any new activities. Understanding this approach is vital to the success of IT transformation efforts, including those that are globally distributed.

Jade Global’s Managed Services experts help implement internal controls, not just as tools to limit downside risks, but open new opportunities through this internal controls management implementation and Internal Control Advisory Services. You can manage up-side opportunities for your organization, enabling the business to take advantage of emerging growth opportunities through innovation or re-engineering of internal functions, and helping businesses embark on their transformation journey.

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Module 15: Control

What does control mean in the business setting, learning outcomes.

• Explain what control means in a business setting.
• Describe the benefits and costs of organizational control.

Control in general is a device or mechanism used to regulate or guide the operation of a machine, apparatus, or system. Control in a business setting, or organizational control , involves the processes and procedures that regulate, guide, and protect an organization. It is one of the four primary managerial functions, along with planning, organizing, and leading.

One common type of control companies use is a set of financial policies. These policies may not be communicated to all employees, but they exist for all but the smallest firms. Controls start with managing cash. For example, controls limit check-writing authority and the use of company credit cards. For example, a firm may require two signatures on checks more than $10,000 or have one person to log journal entries and another person to review the entries. These policies help prevent fraud and errors as well as monitor whether company goals are being met. In larger companies, each department manager submits an annual budget and profit-and-loss statements.

The most common style, or approach, of organizational control is top-down control. With top-down control, decisions are made by high-level executives, and information flows down to the lower-level employees of the organization.

The three types of organizational control include the familiar feedback, proactive, and concurrent controls. We’ll talk about these more later, but first, let’s explore some of the benefits and disadvantages of organizational control.

Practice Question

Implementing organizational control.

Organizational control involves developing rules, procedures, or other protocols for directing the work of employees and processes as well as monitoring the work. Organizational control is an important function because it helps identify errors and deviation from standards so that corrective actions can be taken to achieve goals. The purpose of organizational control is to ensure that a specific function is performed according to established standards.

Organizational control has many varied benefits, including improved communication, financial stability, increased productivity and efficiency, help in meeting annual goals, improved morale, legal compliance, improved quality control, and fraud and error prevention.

Controls help to better define an organization’s objectives so that employees and resources are focused on them. They safeguard against misuse of resources and facilitate corrective measures. Having good records means management will better understand what happened in the past and where change can be effective.

All businesses need controls. Even sole proprietor businesses must keep records for tax reporting. Public companies are legally required to have extensive controls to protect stockholders, and good controls help a company to raise funds through stock and debt issuance.

Employee morale may be higher when workers see that management is paying attention and knows what it is doing. As an earlier module discussed, better morale means better productivity. Better controls can mean more freedom and responsibility for employees. Management is able to step back a little, knowing that the controls will flag any exceptions.

Toyota has made control a competitive advantage. As an article in the Harvard Business Review says, “Toyota’s way is to measure everything—even the noise that car doors make when they open and close as workers perform their final inspections on newly manufactured automobiles.” [1] After bad publicity over unusual brake issues, Toyota was again at the top of Consumer Reports’ 2016 reliability report. [2]

Disadvantages

Even the simplest control is an added expense. Some systems can be very expensive, so management must weigh the cost versus the benefit for each control. Banks spend billions on controls, but it is worthwhile for the large banks, because they handle trillions and their profits are still in the billions.

A control mentality can lead to overstaffing and unsustainable costs for some businesses. Community banks, for example, feel the burden of new regulations on the banking industry more heavily than the largest nationwide banks. Research from the Federal Reserve Bank of Minneapolis, Minnesota, and quoted in the New York Times “suggests that adding just two members to the compliance department would make a third of the smallest banks unprofitable.” [3]

A less obvious expense is maintaining the controls. Systems need continuous updating as the organization changes. If they are not maintained, the controls may become ineffective.

Controls can become a blind spot for management. Overreliance on controls may lead to relaxation in supervision and allow manipulation of accounts and assets. Employees tend to follow the letter of rules, not the intent, so management needs to check in regularly on how controls are actually operating.

A rigid implementation may lead to a slowdown in the operation of the business. At Freddie Mac, a financial services company, the new product approval process required 25 signatures and took more than a year. The new opportunities in the market disappeared before products could be approved.

The wrong controls may expose the firm to more errors and fraud. And employees will be frustrated if the controls are cumbersome.

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• Thomas A. Stewart and Anand P. Raman, “Lessons from Toyota's Long Drive,” Harvard Business Review, July–August 2007, https://hbr.org/2007/07/lessons-from-toyotas-long-drive . ↵
• Michelle Naranjo, “CR's Car Reliability Survey Reveals Shuffles in Brand and Model Rankings,” Consumer Reports, October 24, 2016, https://www.consumerreports.org/car-reliability/car-reliability-survey-2016/ . ↵
• Marshall Lux and Robert Greene, “Dodd-Frank Is Hurting Community Banks,” New York Times, last updated April 14, 2016, https://www.nytimes.com/roomfordebate/2016/04/14/has-dodd-frank-eliminated-the-dangers-in-the-banking-system/dodd-frank-is-hurting-community-banks . ↵
• What Does Control Mean in the Business Setting?. Authored by : Talia Lambarki and Lumen Learning. License : CC BY: Attribution
• Image: Logistics. Authored by : geralt. Located at : https://pixabay.com/en/logistics-personal-group-gears-877568/ . License : CC0: No Rights Reserved