Both operational effectiveness and strategic positioning shape your company's performance but in different ways. Operational effectiveness is about internal competition and doing better today than you did yesterday. Strategic positioning is about external competition and standing out in your industry by doing things differently from your competitors.
If your business isn't efficient, wastes money or produces defective goods, your operations aren't effective. Operational effectiveness is a commitment to superior performance, such as turning out products faster or with a better quality than your competition. It has four components:
- Controlling and managing how well your team performs
- Measuring the processes your company uses
- Improving the processes
- Automating the processes
Strategic positioning is about influencing how others see you: establishing yourself as the big dog in your industry or as the most fashionable, most cutting-edge player in the field. Positioning will happen even if you don't have a plan. Strategic positioning is about making conscious choices, deciding how you want to be perceived and taking steps to get there.
Strategic positioning is important for most organizations, not just for-profit businesses. Arts and cultural groups compete for funding, as do charity groups. They need to position themselves to compete effectively.
Operational effectiveness is often described as a strategy. In the way that most people use the word "strategy" as a plan for achieving goals, that's true. In the world of business-speak, definitions are slightly different.
Operational effectiveness is about how well you build, design, sell or undertake whatever is your organization's mission. It's focused on day-to-day operations. It's about asking how your organization can work faster, leaner or more efficiently.
Strategic positioning is about standing out from the competition. Most customers won't care how efficient or effective your manufacturing or design teams are. They care about how your products compare to the alternatives. Strategic positioning requires asking a different set of questions:
- What can we do differently from the competition?
- Would doing things differently attract more customers or increase customer loyalty?
- Are there operations we can change for better positioning?
- If we change things, will it give us an edge, or will our competition imitate us?
Strategic positioning and operational effectiveness are familiar principles in the business world. As a result, there's no shortage of operational effectiveness and strategy examples you can study to understand the concepts better. Many of the management concepts, tools and techniques of recent years are operational effectiveness methods:
- Total quality management, a policy where every staff member commits to high standards
- Benchmarking, where you compare your operations to the industry's best practices
- Change management, where you set up processes to keep changes orderly and smooth
These aren't useful tools for strategic positioning because they don't help organizations stand out. Industries seize on new management tools and embrace them, so it's unlikely that yours is the only organization using them. Strategic positioning, by contrast, is all about standing out.
- At a time when the electric car market focused on value and economy, Tesla positioned itself as the luxury car company.
- Airlines are no longer as generous with snacks and drinks as they used to be. Jet Blue's positioning plays up that it still offers snacks, friendly service and greater leg room.
- Chipotle competes with Taco Bell as a fast-food chain by emphasizing quality over price.
One strategy isn't automatically superior to another. Positioning yourself as the low-price alternative may be just as effective as positioning based on quality.
It's important to remember that in practice, the two goals are not in conflict. It should never be about operational effectiveness versus strategic positioning, where you have to choose between them.
Every organization needs operational effectiveness. Constant improvement isn't optional unless you've already achieved perfection. Strategic positioning is just as important to your branding and marketing. Effectiveness is no good if nobody's buying your wares.