The Operating Stage of a strategic management process is the fourth and final Phoenix karaoke of the process. During the Operating Stage, a company will stabilize its operating environment, refine its business and market strategy, and identify opportunities for improvement. Coming after the Building Stage, and the growth that normally occurs during it, the Operating Stage can seem boring, like the business has plateaued. However, this feeling is not reality. There is still much work to be done during the Operating Stage, and additional growth in revenue and profitability to be realized.
A key attribute of the Operating Stage is that it forms a feedback loop with the other stages of a strategic management process. After the initial work-through of a strategic management process, a company stays in the Operating Stage forever, or until there is a major revamping of the business. Information is captured in the Operating Stage that is fed back into the other stages in the process, where refinements and adjustments are made as appropriate.
The remainder of this brief article summarizes a few of the more important activities that take place during the Operating Stage.
Making adjustments to the outputs of all three of the other stages of a strategic management process can be extremely beneficial if they are done carefully and thoughtfully. Adjustments can serve to refine a company’s market strategy, business philosophy, and performance management system, and are usually the result of decisions made regarding transactions that are raised during the Operating Stage. These of course can be of many different types, but here are a few of the more common adjustments that we have seen:
- Tweaking the Market Strategy. Normally, there are no major adjustments to market strategy, but minor refinements can be valuable.
- Discontinuing Activities That Are Not Consistent with the Market Strategy. Unfortunately, these adjustments are all too common, and they are difficult decisions for a company to make. However, they are necessary. Continuing activities, whether they be products or services, that are not consistent with a company’s market strategy will only undermine the defined market strategy, and render the entire process invalid.
- Further Refinement of Segments and Buyers. This also is typical. As more is known about customers and buying factors, it is natural to use that information to create deeper segmentation of markets. This can be a valuable exercise.
It probably goes without saying, but decisions regarding transactional adjustments must be made very quickly and implemented without delay. Transactional decisions should not interfere with the timing of the normal daily business flow.
Capturing Information for Improvements
Other information captured during the Operating Stage may not be associated with specific transactions, but is equally as valuable, maybe even more so, because more general information lends itself to broader, longer-term strategic decisions. Information is critical to managing a business strategically. So, it is important to capture as much information as possible on a routine basis. Of course after being captured, the information must then be summarized, triaged, and categorized before being fed back into the other stages of the strategic process.