Strategy & Management Consulting
The best route to a competitive organization is through a solid foundation.
- Link Operations to Finance | Discover Drivers | Drive Strategy -
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Let's work from the basics. The purpose of a business is to make a profit, but markets are very competitive. A business therefore begins with a profit proposition and a customer value proposition. Between the two propositions a business strives to deliver on its competitive market strategy and continually usurp some market share from the competitors. Delivering the goods or services relies upon resources and processes that will make up the responsibility centers and finally total to your overall operations.
Resources and processes aren't free. Capital is required to acquire the necessary resources and assets to set up and carry out the processes relative to the propositions. While we can get more into debt and equity financing and cash flow, operational profitability is found in a business's ability to control costs. Controlling costs does not automatically imply that you are attempting a cost leadership market strategy. It should be obvious in today's marketplace that as producer prices rise and businesses have to determine whether they can pass on these rising costs to their customers, taking steps to assess, control and manage costs is only prudent to preserve profitability thereby continuing to pursue both the profit proposition and customer value proposition.
Thereby, cost management does not mean cheap. Cost management means that you monitor your costs while developing and improving effective and efficient processes, inventory management and resource usage while still delivering on the intent of the competitive market strategy. Coincidently enough, with an understanding of accounting methods, an organizing of processes into responsibility centers and a little financial analysis, you can use your cost management data to analyze process performance, optimize resource utilization, find wasteful spending, control costs, benefit financial planning and identify variances in budgeting to name just a few opportunities. This linking of financial data with operations lays the foundation for strategic management.
Strategy is intended to get your company from where you are now and onto a path that gets you where you want to be, the Vision. This is a simple statement and, like many simple statements, layered in complexity. At the heart of strategy is the pursuance of the sustainable competitive advantage where effective processes are necessary but not sufficient alone. In my opinion, the advantage is best achieved through the concept of alignment, that of resources, processes and capabilities. Alignment is one of the most difficult items of strategy to imitate while it also initiates a total organizational support system. That said, this alignment is found through the exact same means as those that would be used to implement a cost management system. Responsibility centers created, processes mapped, costs analysis implemented, resource utilization evaluated, improvement possibilities noted, resource allocation effectively implemented and the whole system done piece by piece, aligned and the strategic path becomes clear.
Resources and processes aren't free. Capital is required to acquire the necessary resources and assets to set up and carry out the processes relative to the propositions. While we can get more into debt and equity financing and cash flow, operational profitability is found in a business's ability to control costs. Controlling costs does not automatically imply that you are attempting a cost leadership market strategy. It should be obvious in today's marketplace that as producer prices rise and businesses have to determine whether they can pass on these rising costs to their customers, taking steps to assess, control and manage costs is only prudent to preserve profitability thereby continuing to pursue both the profit proposition and customer value proposition.
Thereby, cost management does not mean cheap. Cost management means that you monitor your costs while developing and improving effective and efficient processes, inventory management and resource usage while still delivering on the intent of the competitive market strategy. Coincidently enough, with an understanding of accounting methods, an organizing of processes into responsibility centers and a little financial analysis, you can use your cost management data to analyze process performance, optimize resource utilization, find wasteful spending, control costs, benefit financial planning and identify variances in budgeting to name just a few opportunities. This linking of financial data with operations lays the foundation for strategic management.
Strategy is intended to get your company from where you are now and onto a path that gets you where you want to be, the Vision. This is a simple statement and, like many simple statements, layered in complexity. At the heart of strategy is the pursuance of the sustainable competitive advantage where effective processes are necessary but not sufficient alone. In my opinion, the advantage is best achieved through the concept of alignment, that of resources, processes and capabilities. Alignment is one of the most difficult items of strategy to imitate while it also initiates a total organizational support system. That said, this alignment is found through the exact same means as those that would be used to implement a cost management system. Responsibility centers created, processes mapped, costs analysis implemented, resource utilization evaluated, improvement possibilities noted, resource allocation effectively implemented and the whole system done piece by piece, aligned and the strategic path becomes clear.
