What is your operation’s contribution to the organization’s goals?

The ability of any operation to play a strategic role within the organization can be judged by considering the organizational aims or aspirations of the operations functions.

A Four-Stage Model was developed, by Professors Hayes and Wheelwright of Harvard University, with later contributions from Professor Chase of the University of California, to evaluate the competitive role and contributions of the operations function of any company.  Particularly, black owned companies in South Africa that are in dire need to breach the private sector.  This model traces the progression of the operations function, of  from a largely negative role of Stage 1 operations to the dynamic element of competitive strategy in Stage 4 operations.

In a Stage 1 organization the operation is considered as a “necessary evil” as other functions regard it as holding them back from competing effectively.  The operations function becomes reactive and inward looking and contributes minimally towards competitive success.  The rest of the organization would inevitably not look to operations as the source of any originality, flair or competitive drive.  The operation becomes “internally neutral”, a position it attempts to achieve not by any positive aspirations but by avoiding the bigger mistakes.

Breaking out of Stage 1 begins by comparing itself with similar companies or organizations.  During this stage of progression, the organization may not yet be particularly creative in the way it manages its operations but is attempting to be appropriate, by adopting best practice from its competitors.  Using the best ideas and norms of performance from the rest of its industry is trying to be externally neutral.

Stage 3 operations aspire to be clearly the very best in the market.  Organizations try to achieve this by understanding the company’s competitive or strategic goals and then organize and develop the operation’s resources to excel in the sector that the company needs to compete effectively.  Operation managers will now develop appropriate resources and assuming the role of implementers of strategy.  The operation will soon become internally supportive by providing a credible operations strategy.

A Stage 4 company views the operations function as providing the foundation for its competitive success by focusing on all long term goals.  Likely changes in markets and supply will be forecast and operations-based strategies will be developed to provide the company with the performance required to compete in future market conditions.  It becomes central to strategy making.  Stage 4 operations are creative and proactive and are likely to organize their resources in ways which are innovative and capable of adaptation as markets change.  After all, market leaders tend to be one step ahead of competitors in the way they create products and services and organize their operations.

This Four-Stage Model assesses the performance of the operation compared to the function’s latent aspirations.  As companies move from Stage 1 to Stage 4 there is a progressive shift from its contribution being negative  through to a paradigm shift of strategic contributions.