Understanding the Difference Between Business Strategy and Operational Strategy
As businesses grow and evolve, it’s important to understand the difference between business strategy and operational strategy. While the two are related, they have distinct focuses and play different roles in a company’s success.
Business Strategy
Business strategy is the broad plan that outlines how a business will achieve its goals. It’s the high-level thinking that defines the overall direction and purpose of the company. Business strategy is typically set by senior leaders and outlines the company’s vision, mission, and values.
Business strategy answers questions such as:
– What market does the company serve?
– What products or services does the company offer?
– How will the company compete in the market?
– How will the company differentiate itself from competitors?
– What are the long-term goals of the company?
Operational Strategy
Operational strategy involves the practical steps required to execute the business strategy. It details how the company will achieve its goals and objectives through day-to-day operations. Operational strategy is often created by middle-level management, and it focuses on the implementation of the business strategy.
Operational strategy answers questions such as:
– How will the company produce or deliver its products or services?
– What processes are required to achieve the business goals?
– What resources are needed to achieve the business goals?
– What are the short-term objectives of the company?
– How will the company measure success?
The Relationship Between Business and Operational Strategy
Business and operational strategy work in tandem to achieve the company’s goals. Business strategy sets the overall direction, while operational strategy outlines the specific actions required to execute that direction.
For example, a business strategy might be to increase market share by expanding into new geographic regions. The operational strategy might then outline the steps required to open new stores, hire and train staff, and market to new customers in those regions.
Examples of Business and Operational Strategy in Action
To better illustrate the difference between business and operational strategy, let’s look at a couple of examples:
Example 1: Apple Inc.
– Business strategy: Apple’s business strategy focuses on creating innovative technology products that are both aesthetically pleasing and functional. Its mission is to revolutionize the tech industry, and it does so by producing high-quality hardware and software that integrates well with each other.
– Operational strategy: Apple’s operational strategy details the specific steps required to develop and manufacture its products, from sourcing high-quality materials to designing and testing each component. Its retail operations are also a key part of its operational strategy, which focuses on providing an exceptional customer experience.
Example 2: Starbucks
– Business strategy: Starbucks’ business strategy is focused on creating a third place experience (neither home nor work) for its customers. Its mission is to inspire and nurture the human spirit, one person, one cup, and one neighborhood at a time.
– Operational strategy: Starbucks’ operational strategy outlines the specific steps required to deliver that third place experience, from sourcing high-quality coffee beans to training baristas to create the perfect latte. Its store design, music selection, and menu options are all carefully crafted to deliver on its business strategy.
Conclusion
Understanding the difference between business and operational strategy is crucial for any business leader. While business strategy sets the direction, operational strategy outlines the practical steps required to achieve success. Both strategies work together to drive a company towards its goals, making it important to have a clear understanding of each.
