Can operational issues change your strategy?
It’s not unusual, in strategic planning, to hear a team member say an issue is “just an operational issue”. In many cases, this may be correct – lots of operational issues don’t belong in your strategy discussions. In other cases, how your operation works can be central to the success – or failure – of your strategy.
Strategy at Wendy’s
Consider Wendy’s restaurants. Of course, Wendy’s makes burgers, shakes, fries – typical fast-food fare. Strategically, Wendy’s differentiated themselves for years by making the burgers “fresh”, to order, after the customer came into the restaurant. This is a marked contrast to the fast-food practice of keeping hot food on a heat source until it is needed, and it’s operationally a bit more difficult.
The real difficulty included two elements that are vital to fast-food success: speed and cost. When you aren’t putting a burger patty on a steam table to keep it warm, it will spoil faster and must be thrown out. This means that the failure to keep some patties warm will lead to waste, in an operation where the cost is critical. It also means that every burger you sell will have to go through the cooking process between the customer coming in and when they get their burger.
Making it quickly – AND cheaply
Wendy’s addressed this issue by using a formula for putting patties on the grill as soon as the customers came in the building. If three people come in, for example, you might assume two will get a double, one will get a single, and one will not get a burger at all. This means you’ll want to have five fresh-cooked patties as soon as possible after the customer places their order. If that were a typical scenario, Wendy’s would want there to be five patties places on the grill for every three people walking in.
But what if no one orders a burger because they are just there to get French fries? Wendy’s had a good solution to this – they would throw the unused patties into a chili pot, so that the meat wouldn’t be wasted. So Wendy’s sold chili as a way to keep costs down while serving freshly made burgers. Is this an operational choice? You bet. Is it strategic? Also yes – because anything that determines what you sell, to whom you sell it, or how you beat your competition is strategic. Thus, selling chili, an operational choice, was the core means by which Wendy’s beat their competition with freshly made burgers.
In this case, the operational choice was absolutely strategic. It was strategic because the differentiation of the Wendy’s brand rested on freshly made burgers. This would be either slower or prohibitively expensive if Wendy’s didn’t have a simple way to handle the vagaries of customer behaviors.
Your Strategic Operational Choices
In your operation, you may have options like this. Some choices you make in your operation will affect speed, cost, quality or customer preferences. Companies that try to do all of these things well are unlikely to beat competitors at any of these elements. This is very common in industries where no one is dominating. Breakout strategic performance only happens when you choose to do something that differentiates you from your competitors.
Is making chili an operational choice for Wendy’s? Certainly. Is it JUST an operational choice? Absolutely not.
The strategic question for most organizations is “How can we operate differently to better serve our specific target customers?”. If you can come up with your own Wendy’s chili, you can. The key strategic choice here is picking a way you can be better. The operational choice is working through how your operation supports that. I’ve seen this happen in many industries – airlines, financial services, manufacturers, and publishers, to name a few. So, the question for you is how can YOU set yourself apart, operationally?
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