must clearly distinguish operational effectiveness from strategy. Both are essential, but the two agendas are different. The operational agenda
involves continual improvement everywhere there are no trade-offs. Failure
to do this creates vulnerability even for companies with a good strategy.
The operational agenda is the proper place for constant change,
flexibility, and relentless efforts to achieve best practice. In contrast, the strategic agenda is the right place for defining a unique position,
making clear trade-offs, and tightening fit." from "What is
strategy?", Michael E. Porter, Harvard Business Review, Volume 74, Number 6
With reference to my previous post and the insightful discussions in the comments, I thought to clarify my thinking a little further. Design (not design thinking), very clearly falls in the realm of operational effectiveness, as derived from the explanation given above – let’s use the iPod as a commonly understood example – it is very well designed. It would not have reached it’s iconic status if it were not well designed. But, to hazard a guess, since I don’t know Steve Jobs, Apple’s strategy could be said to be the leader in the market of portable, user friendly, hard drives that allow you replay the stored information. Hypothetically, mind you, and with respect to the iPod only, for the purposes of this conversation. His vision is clear and Apple’s unique value proposition – the experience – well differentiated. But his strategy of maintaining leadership in this arena [clearly defined, per Porter’s definition in the previous post] is supported by his operational effectiveness in releasing a new product [in the same product category – strategy] with a quality and frequency that leaves the other players behind.
Had he not had this clear strategy he could have done any number of things that many do to maximize the revenue generation possiblities – released an iPod clothing line, offered iPod accessories, whatever, but these would have moved him away from his core value proposition. This would have been short term thinking, how to maximise the cachet of the iPod brandname or, you could say, the result of not having a well defined strategy. By continuing to make trade-offs and tightening fit, he’s continued to maintain his strategic agenda.
[Update Feb 7 2006] BusinessWeek has this interesting news snippet today about Apple’s latest release, a cheaper version of the Nano and a price cut on the Shuffle, both of these activities directly impacting the increase in shareholder value viz.,
"The only other company that has cheaper products out there is
Creative," Munster said. "So not only are Apple products the best, now
they’re also the cheapest, which makes it impossible for others to
One more link – no, I wasn’t looking for this, it just popped up in Google news – is to this interesting discussion on Apple’s iPod and it’s customer service set up, or lack thereof. I found it of interest because the author says,
Consumers, though, don’t really understand this. As much as they like
being able to buy computers for less than $1,000, they neither accept
nor understand that the trade-off is minimal tech support. Nor do the
consumer electronics companies want to spell this out; instead, they
pretend that their service is terrific.
Thus, there is a gap between what customers expect from companies
that sell them complicated digital machines, and what companies feel
they need to do in order to insure that those machines are profitable
Its battery wears down and
can’t be easily replaced because an iPod can’t be opened up by mere
mortals. All of these were conscious design choices Apple made. Given
that the core customer is a teenager, and that even the rest of us give
our iPods a lot of wear and tear, you have to wonder.
There’s something in that, I’ll come back to it, but in the context of the rest of this post one wonders whether trade-offs in operational effectiveness are good strategy?