Niwot Ridge Resources

A Source of Information for Mission Critical Systems, Management Processes, and Strategies

Strategy is creating fit among a company’s activities. The success of a strategy depends on doing many things well – not just a few. The things that are done well must operate within a close knit system. If there is no fit among the activities, there is no distinctive strategy and little to sustain the strategic deployment process. Management then reverts to the simpler task of overseeing independent functions. When this occurs operational effectiveness determines the relative performance of the organization. [1]

Improving operational effectiveness is a necessary part of management, but it is not strategy. In confusing the two, managers will be unintentionally backed into a way of thinking about competition that drives the business support processes (IT) away from the strategic support and toward the tactical improvement of operational effectiveness.

Managers must be able to clearly distinguish operational effectiveness from strategy. Both are essential, but the two agendas are different. The operational effectiveness agenda involves continual improvement business processes that have no trade–offs associated with them. The operational effectiveness agenda is the proper place for constant change, flexibility, and relentless efforts to achieve best practices. In contrast, the strategic agenda is the place for making clear tradeoffs and tightening the fit between the participating business components. Strategy involves the continual search for ways to reinforce and extend the company’s position in the market place.

The concept of fit among functional units is one of the oldest ideas in strategy. Gradually however, it has been supplanted with new concepts of core competencies, critical resources and key success factors. In fact fit is far more critical to the success of the IT systems than is realized. [1] Strategic fit among the various systems components and the business processes they support is fundamental not only to competitive advantage but also to the sustainability of that advantage.

Fit among a company’s activities creates pressures and incentives to improve operational effectiveness. Fit means that poor performance in one activity will degrade the performance in others, so that weaknesses are exposed drawing management’s attention. Conversely, with increasing fit, improvements of one activity will pay dividends in other areas.

The challenge now is to create fit among the IT components and their matching business components.

[1] “What is Strategy,” M. E. Porter, Harvard Business Review, Volume 74, Number 6, pp. 61–78.

Jack Welch Speaks: Wisdom from the World’s Greatest Business Leader, J. Welch and J. C. Lowe, John Wiley & Sons, 1998.

Control Your Destiny or Someone Else Will: Lessons in Mastering Change–From the Principles Jack Welch Used to Revolutionize GE, N. M. Tichy and S. Sherman, Harpers Business, 1994.

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