A direct business impact from the less-robust-than-expected global economic growth is the push 
from business owners, investors, board members, and executives for business leaders to tighten their belts and become more “Operationally Efficient.”
Unfortunately, too many leaders who are told to, or decide to become more operationally efficient don’t have the Business Acumen to know what that really means and confuse it with the strategic value proposition of “Operational Excellence.” Their misinformed interpretation of Operation Excellence translates into across-the-board cost cutting which ultimately is not strategic, creates misalignment, negative employee engagement, and operational inefficiencies.
What these business leaders without the right Business Acumen are really looking for is something I call “Operational Intelligence”. Very simply, Operational Intelligence is defined as the ability to assess the business situation and fix the things that aren’t working, or are wasteful, in order to execute a real business strategy and value proposition.
As part of my continuous research for designing and building dynamic and leading edge Business Simulations for use in our Business Acumen learning journeys, I recently studied several industries and companies within those industries that have struggled with not being very operationally intelligent. As the diagram below illustrates, there is a distinct pattern:
Survival Mode
The first and most interesting pattern is that companies going through significant change or turmoil such as M&A, Spin-Outs, Economic downturns, etc. don’t realize it but are in survival mode. Survival mode literally means they are fighting to stay alive and out of bankruptcy. They slash R&D, Marketing, Sales, and Human Resources to stay afloat.
Operational Intelligence
This is what companies in survival mode should be doing to move from survival mode to the development of a new or updated Value Proposition (strategy) to customers. Working under the assumption that every function and every process can be more efficient. Operationally Intelligent leaders focus on the areas of most immediate impact that support the strategy and ability to meet short term financial obligations and needs.
Business Process Improvements
Leaders with strong Business Acumen understand they can’t do everything, they can’t fix everything, and they can’t be all things to all customers. They must focus on those business elements that will have the most profound and immediate impact. The most typical areas to immediately improve and focus on include:
- Sales and Marketing - the overall processes of demand and revenue generation
- Customer Service – the flawless execution of the customer experience
- Financial management - in the areas of receivables and cash management
These thee areas provide the most impact, can become a rallying cry for employee engagement, and focus on the critical business elements needed to move from survival to executing a strong strategy.
Developing the Value Proposition
After moving from survival, to Operational Intelligence, to cleaning things up through coordinated business process improvements, the company can then move forward and choose the most appropriate business strategy to execute. It is critical to point out that Operational Excellence is a strategy that is all about driving costs out of the system of business to be able to offer customers low prices. Again, leaders without strong business acumen think it’s just about cutting costs. That mentality can cause significant damage to a brand; especially brands that relay on a Product Leadership or Customer Intimacy strategy.
Execution
Once the strategy has been developed, the hardest part of this process is execution. Strong leaders understand that the most successful organizations in the world choose one clear value proposition and are equal to or slightly above the average to their competitors on the other areas and functions of the business. In other words, it is impossible to be the lowest cost/price, have the best products, and provide the greatest amount of customization and customer service.
