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Definition of the operational strategy
The operational strategy allows the implementation of the company's strategic decisions. She oversees all the day-to-day activities of the company and optimizes its resources in order to achieve the objectives set by the management. Managed by the middle hierarchy, i.e. managers, the operational strategy has short- and medium-term repercussions and acts in coherence with the ambitions of strategic management.
Strategic management and operational management are complimentary within the company and necessary for its proper functioning. On the one hand, strategic management concerns the decisions taken at the level of the general management in order to ensure the development and viability of the company. On the other hand, operational management is part of the day-to-day management of operations by middle managers to put into action the decisions of strategic management.
Operational decisions have a quick impact on the company's business, unlike strategic decisions that have a long-term horizon but are reversible. They do not impact the general operation of the company and are executed by employees.
How to set up an operational strategy?
Establish an operational plan
To develop their strategy, companies prepare a strategic plan that aims to describe their ambitions and objectives as well as the main actions to be taken. However, the strategic plan is not intended to explain precisely how to achieve these objectives in practice. To overcome this lack of details, a complementary plan is needed: the operational plan. The operational plan provides clear and detailed indications on the rational planning of all the actions to be carried out in order to achieve the strategic vision of the company.
The operational plan, therefore, allows the realization of the strategic plan from which it is derived. It starts with a global vision of the key missions to be accomplished and then goes into the details of the different steps required. A solid operational plan is an essential condition for the relevance and success of the operational strategy.
Set specific goals
The company's strategy is subject to a long temporality that extends over several years. The operational plan breaks down the strategic plan into several short- and medium-term operational objectives, which are the practical declination of the strategic objectives. It allocates deadlines to these operational objectives according to their priority. They are then fixed in time and broken down into concrete and precise actions that will help their realization. It will then be necessary to adapt the means to the operational objectives since each of them requires a person or a team in charge as well as resources.
By setting specific objectives over time, the operational plan moves in stages towards the implementation of the strategic plan on a weekly, monthly, quarterly or annual basis.
Plan the budget
Operational strategy comes at a cost. After defining the objectives of the operational plan, the Director of Operations must plan the budget necessary for the implementation of all the projects, tasks, and activities programmed. The budget of an operational plan translates into financial terms the resources mobilized and the expected results. In general, it breaks down expenses annually according to a rolling plan and is thus reviewed periodically according to the actual results of the company. Budget is therefore one of the main factors to consider when allocating resources, allocating tasks within teams, and negotiating the salaries of each employee.
Track performance using KPIs
The implementation of a reporting system makes it possible to evaluate the progress of the company's objectives. This is an essential function, not only to ensure the proper functioning of the operational strategy but also to be accountable to management. In order to monitor their performance, one or more KPIs are associated with the various operational actions. These KPIs help to analyze their success and failure criteria according to the expected achievements and assign them a numerical value.
A good KPI must serve a specific purpose, be quantifiable, have a time limit, and allow actions to be taken. For example, in sales, we will talk about the number of products sold, the acquisition of new customers, or the conversion rate. Monitoring the performance of operational actions makes it possible to calculate the ratio between predictive measures and the reality of the business and thus determine whether adjustments are necessary.
Make the necessary changes and adjustments
Operational strategy cannot be static. In a changing environment, whether it is the underperformance or overperformance of certain objectives or the emergence of new competitors, it must be able to adapt and show agility. The role of the operational manager is to optimize strategic decisions and when targeting a significant difference between forecasts and the field, must be able to find solutions to solve everyday problems with flexibility.
On the other hand, planning is a continuous task that requires a constant ability to adapt. Managers need to build a strong team that they can rely on and rely on when rescheduling is needed during the year. It is never too early to start recruiting because many parameters must be taken into account. It is of course necessary to meet the needs of the company but also those of each employee in order to ensure good performance and an atmosphere promoting productivity.