Page 377 - Operations Strategy

352 The proCess oF operaTIons sTraTegy – monITorIng and ConTrol
means that if the alignment between operations capabilities and market requirements
is too ‘tight’ or ‘narrow’ this could mean that what was previously alignment between
the two can (relatively) move off the line of it. A looser or broader set of capabilities and
market relationships, however, can provide some insurance against these unexpected
shifts. This difference between tight and loose alignment is illustrated in Figure 10.6.

market and operations performance becoming out of balance

Particularly during implementation, when changes in both market positioning and
operations resources are likely, the possibility of deviating from the ‘line of fit’ (see
Figure 9.2 in Chapter 9) is very real. This may be because some part of the implementa-
tion is not going to plan – for example, delays in the implementation of a new website
means that customers do not receive the level of service they were promised; or, it may
be an inevitable and expected part of the implementation plan – for example, a firm
may plan to install and debug a new IT system before it starts to use its potential to
make promises to its market. Either way, the deviation from alignment between market
requirements and operations resources is exposing the firm to risk, and while there is
no widely accepted definition for operations-related risk, our working definition of
operations-related risk is as follows:
‘Operations risk is the potential for unwanted negative consequences from an operations-
related event.’
Many risks can be related to the uncertainty associated with both the development
of an operational resource base and shifting market requirements. Any operations
strategy implementation, therefore, must accommodate these risks. Figure 10.7 illus-
trates this idea. Moving above the diagonal implies that market performance (i.e., the
requirements and/or the expectations of the market) are in advance of the operation’s

Figure 10.6 excessively tight ‘fit’ can increase the risks of misalignment between
market requirements and operations resources capability

Tight fit Loose fit
Line of fit Line of fit

Market requirements Movement in market Market requirements Looser fit between

market requirements
and operations
requirements and
operations resources
alignment
produces misalignment resources preserves

Level of operations Level of operations
resource capability resource capability
Original market requirements New market requirements and
and operations resource capability operations resource capability

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