When ‘Operational Excellence’ Is Your Best Growth Lever

Context

An owner of a restaurant (who knew that I was a business consultant) once asked me: What should be my business strategy?

I was stumped. I felt in my gut that the concept of Competitive Strategy is not going to be of much help to this guy. But, I was not able to come with up a more appropriate growth lever for his situation.

Then I gave some thought to some of the successful food businesses around me.

I realized that these businesses were mainly successful because customers really liked their food! These businesses knew how to make good food!

Businesses can not achieve great success solely by Marketing, Sales, etc. The most fundamental lever of growth is: Operational excellence.

Now, before you dismiss the above as obvious wisdom, please read Porter’s article where he argues an opposite point to mine in the context of Japanese companies–that Operational excellence is not enough.

Porter is right. But only in the context of large businesses. Large businesses cannot compete solely based on ops excellence. Reason: Their operational best-practices get copied sooner or later! Example: Toyota. That is why large companies, after achieving operational excellence, need to think about competitive strategy.

But, operational excellence is still the right aspiration for Small and Medium enterprises. Why? Because, most SME businesses have not yet achieved operational excellence. And because SME best practices are not easily discovered and hence are not that easily copied!

Read more of my post at LinkedIn.com.

Key Insight

Strategy may be next destination after Ops excellence for large companies. But, for small and medium enterprises, Ops excellence is still the holy grail.

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