Page 105 - Operations Strategy

80 CHAPTER 2 • OPERATiOns PERfORmAnCE
footprint associated with the transaction. Others are less obvious but equally challeng-
ing. For example, doing things voluntarily is often presented as an important principle of
corporate social responsibility and yet subsequent regulatory changes – such as a univer-
sally accepted price for carbon – may require an organisation to make further adaptations.
In fact, there are several ‘dimensions’ of CSR, some of which are briefly described in
Table 2.5. And even at this simple level one can see that CSR is a very broad term, encompass-
ing a range of potentially complementary, but also potentially contradictory, objectives.
Figure 2.12 illustrates the idea of trade-offs between the financial and the ethical per-
formance of any operations. The first point to make is that there are relatively extreme
positions on both financial and ethical performance. On the side of those who believe
that CSR is essentially a distraction for business, the most famous quote comes from
Milton Friedman, the famous economist, who said, ‘The business of business is business.
A society that puts equality before freedom will get neither. A society that puts freedom before
equality will get a high degree of both.’ In the opposite corner, representing those who believe
that business should exist only in the context of a broader set of social responsibilities, is
the founder of Body Shop – Anita Roddick. She said, ‘In terms of power and influence there
is no more powerful institution in society than business.... The business of business should not be
about money, it should be about responsibility. It should be about public good, not private greed.’
In between these two positions, most businesses try and reach some degree of com-
promise. In this sense they are ‘repositioning’ themselves on an efficient frontier, as
shown in Figure 2.12(a). As pointed out earlier, repositioning an operation on the effi-
cient frontier is sometimes necessary as the demands of the market (or environment)
change. In this case, it is increasingly difficult to focus exclusively on either financial or
ethical performance. Societal pressure and issues of reputational risk are defining mini-
mum ethical standards, while tough market conditions and stockholder expectations
are defining minimum financial standards. Thus, exercising improvement creativity to
try and become better at financial and ethical performance simultaneously could be
argued to be the only realistic option for most businesses (see Figure 2.12(b)).

targeting and operations focus

The idea of repositioning the trade-off balance between conflicting performance objec-
tives underpins one of the most effective ‘types’ of operations strategy – focused opera-
tions. This concept of focus is both powerful and proven because at its heart lies a very

table 2.5 multiple dimensions of sustainability

Type Definition
Environmental The impact of operations on the natural environment (e.g. pollution) and, in
particular, carbon footprint.
Social The relationship between business and society in general; considering all
stakeholders or stakeholder groups.
Economic The contribution made to economic development – in particular in areas/
countries with relative economic disadvantage.
Voluntariness Undertaking actions not prescribed by law. Doing more than you have to.

M02 Operations Strategy 62492.indd 80 02/03/2017 13:01