by Pat Bodin
Reducing unnecessary friction is vital if you want to earn a spot in the lead boat. One way that I have found to reduce friction and understand more clearly the role a business leader plays is to ask them, as I did this CPA, what business function they lead. The director of sales isn’t a “line of business” but rather is the functional leader of the sales department; the Chief Marketing Officer isn’t a “line of business,” but rather is the functional leader of marketing, and so forth. Use their language and hone your focus on what they do.
Now, there is such a thing as a “line of business” but it is not every business person. In a service organization, the head of sales for a region is responsible for that line (or territory of business). In a product manufacturer, the head of that particular product is responsible for that particular line. The people who actually refer to themselves as “line of business” is a narrow portion of the business people. You don’t need to keep up with who calls themselves “line of business” – just ask them what function they have. They’ll tell you.
The bottom line for strategists is that they provide the structure to the organization. Strategists captain the ship, pointing the rudder in the right direction.
Tier two: Operations
Operations is the engine that pushes the business forward. It includes the people, processes, and technology that propel the organization. Enabling is the job of Operations. The strategists create the plan and Operations enables the organization to fulfill it by implementing processes and policies. Operations desire to reduce friction with people and technology. Consider Apple, which sold 41 million iPhones in Q3 2017. With that high sales volume, they must eliminate friction in their supply chain, lest they fail to ship phones on time. Procedures and policies exist not as ends in themselves, but to reduce friction.
Most of an organization’s employees are in Operations. They work in business processes and need to be aligned with corporate and regulatory policies. Thus, any change to existing business processes or policies has a direct impact on the Operations people. Each department in Operations has managers and leaders who are subordinate to the functional leaders and responsible to enable their strategy. Operations is the engine of the business.
Applications are vital to Operations. While it is true that strategists may need the use of email and business dashboards in their job, Operations core functionality requires applications to complete its job. In my observation, many people perceive that there are a few critically important applications and literally thousands of processes. This is not the case. There are hundreds to thousands of applications, depending of the size of the enterprise, and only a couple dozen or fewer processes. Many people are confused between the general process (Sales, Training, etc.) and the specific standard operating procedures (SOPs). It is kind of like the old adage about not seeing the forest for the trees; it is easy to get so caught up in looking at the trees (the SOPs) that we lose the sight of what is fundamentally the more important thing – the forest (the process). When you look at the specific process (sales, manufacturing, supply chain, field service, etc.), it is best to use a macro level perspective, unless you have ownership and responsibility for the specific process. A micro level perspective provides little value to our understanding. The heart of the operational world is process and policy, the engine by which Operations enables the organization’s goals.
Tier three: Tactical
The Tactical component of an organization provides support. Tacticians are internally focused and they supply the basic functionality that operators need do their job. For instance, tacticians manage the warehouses in the manufacturing supply chain. They handle the facilities where strategists and operators work. They provide the IT infrastructure. They set up phones and computers and networks.
Do companies need these tacticians? Yes, absolutely—they are key to success. Do tacticians need to be employed full time by the company? Not necessarily—they could be outsourced. Historically, many companies have done that, perhaps contracting with a third-party distribution center or outsourcing part of IT. But there is a disconnect between the operators and the outsourced company; the outside party may perform better than internal IT, but it is not as closely aligned with the goals of the business. The outsourcer’s goal is to make money from the service. Unfortunately, that can cause innovation to stall or lead the outsourcer to charge for any small change that occurs outside the contract. This causes friction. Nevertheless, outsourcing of warehousing, facilities, and technology is becoming more commonplace. Since the operators are the ones receiving support, the fundamental question is, “What is the right decision for the operators and the organization?” Tacticians help operators get their job done.
How The Tiers Fit Together
How do the tiers fit together within an organization? You can think about them as three parts of a ship.
• Strategy – the captain
• Operations – the engine
• Tactical – the hull4
A ship’s captain instructs his men to “Point the ship in this direction,” which is precisely the job of the strategists. They should set the rudder and then get out of the way so that the operators can work.
The engine propels the boat toward its destination, which is the task of the operators. They make the ship go.
The hull that supports the entire ship is like the tacticians who support the other two tiers. They keep the company from falling apart at the seams.
What is the ratio of strategists to operators to tacticians? Most organizations have only a few people in the Strategy tier. Commercial companies then have many operators with relatively fewer tacticians supporting them. Even if you want to be an enabler in Operations, you may find yourself in a tactician’s role due to the nature of the organization.
Chapter 3.
Value Chaining
Do you like coffee? 400 billion cups of coffee are consumed globally per year, so if you do, you aren’t alone. What do people like about coffee? Many people enjoy coffee’s cultural aspects; Meeting up for coffee can be a nice, informal way for them to meet new people or get together with old friends; “Let’s do coffee!” For some, coffee has become a habit – it’s the way they wake up every morning; “Don’t talk to me before my first cup of coffee!” Other people appreciate the chemical in coffee which allows them to focus whereas it would otherwise be difficult; “I need to drink coffee to be able to make my coffee!” And some people just like coffee’s aroma, warmth, and flavor; “Mmmm. Coffee!”
Although these are all different benefits, they have a similar thread; they are intangible and often they are feelings. There are people in Brazil, the largest producer of coffee beans in the world, that know everything there is to know about the coffee bean, all of its tangible benefits and what features, qualities, and growing conditions make the best beans. Ultimately, however, a coffee bean has little use if it doesn’t make its way into our coffee cup. This happens when we prepare the bean, a process which involves roasting, grinding and brewing. Interestingly enough, most end customers of coffee care very little about the bean itself, but care a great deal about the taste and the aroma produced by the bean. Connecting the tangible (bean) with the intangible (aroma, taste) through the process (roasting and grinding style, brewing device) is the key to great coffee.
Connecting Coffee Beans To Intangible Value
If you want to make coffee, what is the primary ingredient? Coffee beans. You can find coffee beans at any grocery store, at that international coffee chain that’s on every corner, and at your local, hipster coffee shop.
Some people care a lot about growing the bean—we might call them “coffee tacticians”. They know the history of the bean (which, they may even correct you, is technically the seed of the coffee “cherry,” rather than a bean), they know the climate and altitude it grows best in, its growing season, and they know when is the best time to harvest the bean for the fullest flavor. Coffee tacticians love nitty-gritty bean details.
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nbsp; On the other end of the spectrum, some people care little about beans. They only drink coffee for alertness, or morning ritual, or aroma, or social value. These “coffee strategists” focus on the results coffee offers. Coffee tacticians quickly bore them with discussions of organic, fair-trade, small-batch, high-flavor, low-something beans.
Coffee tacticians have very specific knowledge about beans. Coffee strategists have very specific desires that coffee can help them achieve. However, they communicate with each other poorly: The strategist asks the tactician for a cup of Joe and is forced to endure a bean lecture. The tactician asks the strategist for funds to support a small farmer and is surprised by the lack of interest. How do you connect the two together?
Enter the “coffee operator”. He knows how to receive beans from the tactician, roast those beans, grind them, put them into a French Press or drip brewer or Keurig, and come out with the dark, flavorful brew that the strategist so desires. The operator selects a process that is precise to the strategist’s desire. Does the strategist want nuanced flavor? French press. Convenience? Programmable drip brewer so that it’s already brewed in the morning upon waking. Speed? Keurig is the way to go. The operator connects strategy and tactics.
You may be a talented bean tactician who can grow the best coffee ever, yet be ignorant of (or just not care about) what happens after you package it and send it off to processing. There is a disconnect between your competency as a tactician and the needs of the business. Another disconnect occurs when the strategists’ intentions get garbled as they flow down through the business tiers. In the end, everyone misunderstands and frustration ensues.
In the three tiers of business architecture, the level of Strategy is not precise. Up on the top level, the 50,000-foot view matters most. This is why John Sculley could change jobs from president of PepsiCo to CEO of Apple. It’s why Alan Mulally could switch from CEO of Boeing to CEO of Ford. Airplanes and automobiles are totally different industries with diverse buying cycles, but the strategy is similar enough that a high-level executive can switch from one to the other.
The challenge is that the speed of business is changing. According to the Harvard Business Review, “Half a century ago, the life expectancy of a firm in the Fortune 500 was around 75 years. Now it’s less than 15 years.”5 For their business to survive, strategists must be able to quickly alter its course in response to market realities. The captain must call out course changes faster than ever before. Even so, the level of precision to the company is not high: executives can switch from the Department of Defense to Coca-Cola to the Cartoon Network. Their job is strategy, and while strategy is specific, it is not precise.
The same is true down in the Tactical world. Let’s say you’re a talented infrastructure network engineer—you can route packets anywhere given any protocol. You might work for Cisco today, a railroad next year, and an airline five years down the road. Your job is very specific, but not precise to the company.
How do you connect the specific (but not precise) trajectory of the strategist to the specific (but not precise) tasks of the tactician? You use an operator. Zooming in on the second tier, this is where precision occurs.
Operators connect the specific goals of the strategists and the specific tasks of the tacticians with precision. Operators receive inputs from the tactician, then turn those into outputs that the strategists request. The output is the intangible benefit your organization offers. For instance, if you work in public safety, the intangible benefit is feeling safe. To accomplish that intangible result, you must do tangible procedures, like have a police car drive past a certain corner every 15 minutes. You need policies associated with those procedures, like “Turn on the body camera whenever a 911 call comes in.” Precision dwells at the level of the operator. Operators connect tacticians to strategists. They identify a “value chain” that extends from the most nuts-and-bolts tactical activities all the way up to the stratosphere of strategic business planning.
Connecting Your Work To Business Value
To be relevant in your job, you must connect your work to business value. The job of IT is to manufacture technology and services for the functional leaders of the business. How do you connect your day-to-day work to the value your organization delivers to end users? Value chaining answers that question.
Michael Porter is a teacher at Harvard Business School, the most-cited scholar today in the fields of economics and business.6 Originally introduced in Porter’s book Competitive Advantage: Creating and Sustaining Superior Performance, the concept of the value chain expertly connects business activities to business outcomes. A value chain is “a set of activities that an organization carries out to create value for its customers.”7 Value chaining connects the dots between the activities of tacticians, operators, and strategists to show how value is created.
In the coffee value chain, beans go through a French Press to create flavor. The different parts of the value chain interrelate. If the goal is a hit of caffeine, the quality of beans is not so important. If the goal is a fantastic cup of coffee to serve a client while negotiating a deal, the quality of beans matters enormously. The tactician delivers value to the process not when he produces beans in a vacuum, but when he produces the right beans to hit the goal.
Here are some other value chaining examples.
SpaceX
Consider Elon Musk at SpaceX: his goal is Mars by 2024. His buyers are NASA and certain specialized businesses.
How will he achieve that? With increasingly advanced rockets, such as the re-usable ones SpaceX has now successfully landed back on earth after trips to space.
What needs done to promote that how? A ton of very specific, technical, and tactical work.
That’s value chaining: connecting the dots between what and how and why.
Railroads
A U.S. railroad company can earn $800 million more revenue per year if they can increase the average speed of a cargo locomotive by 1 MPH. “Increase speed by 1 MPH” is a goal the railroads’ strategists came up with.
If you know anything about railroads, you know the solution would not be to “push down on the gas pedal.” Plenty of obstacles stand in the way of achieving that goal of increased speed: weight, timing, cycling issues, outdated technology. Enablers must analyze those and innovate how to increase speed. Then they hand specific projects to the tacticians so they can make improvements.
FitBit
Here’s an example of a value chain in my personal life. I wear a Fitbit. It uses light pulses to track my heart rate, all day and all night. Since the Fitbit’s design is unobtrusive, I feel comfortable wearing it all day. Fitbit’s value chain looks like this:
When I work out, I use the Polar H10 heart rate sensor for more accurate heart rate tracking. This is a chest strap that uses electrocardiograph (EKG) technology to measure electrical impulses created by the heart as it beats. The value chain is similar, but slightly different:
What do you do at your business? What process are you involved in? What value does that process create? Answer those questions and you’re on the way to identifying your own value chain.
Communicating value in real-life encounters
Robert Schaffner’s Story:
A friend of mine began his career selling Segways. He thought his product was fantastic, but he lived in a village in the countryside where the need for Segways is somewhat limited. He explored the region to find out who might benefit from one. He thought of a large car manufacturer in Bavaria—you might be able to guess which one. ‘How can I gain entrance to that company?’ he asked himself.
A contact of his who worked at the company gave him a tour of the plant. He noticed that the assembly line was very long, so he asked, ‘Say there’s a problem at one end of the production line and the engineer you need to solve the problem is at the other end. How long does it take him to walk from one end to the other? How much does that cost you?’
My friend learned that the engineer might need 10 minutes
to walk the whole distance and 5 minutes to fix the problem. A production line pause of 15 minutes costs thousands of dollars—more than the Segway’s price of a few thousand. My friend’s question led to a purchase of about 20 Segways in order to reduce that 15-minute fix time to 8–10 minutes.
The point of that example is that you need to understand what people care about. Only then will your offer resonate with them. My friend connected the features of his product to the benefit it delivered—he identified a value chain. You can do the same.
Value chaining helps tacticians communicate the value of their job to higher-ups. See, most tacticians tend to think their work is inherently valuable inside a vacuum. Maybe a tactician is talented at configuring P2P on a public internet connection. Unfortunately, that by itself has no value to the organization and the intangible benefit it aims to deliver. The problem is compounded by the stark reality that many tacticians cannot even communicate what that intangible benefit is supposed to be.
One of my friends used to run IT infrastructure for a large IT manufacturer. He shared one of his goals with me: If his network engineers were to get in an elevator with the CEO, he wanted them to be able to carry on a relevant conversation for those 45 seconds. Typically, the CEO, being a strategist who focuses on intangibles, would start out with something like, “What do you do here?” Most network engineers, being tacticians who focus internally on tangibles, would reply, “My job is to configure a P2P router from here to New York City. My challenge right now is configuring the VPN tunnel between the two, because the configuration is giving me problems.”