Strategic or operational business functions, is there an option?

For a long time professions such as Human Resources and Marketing have aimed to be strategic players. Often some functions are sub contracted, with the “strategic stuff” retained in house.

Is this sustainable?

What might be operational one day is strategic the next! IT is a great example of this.

Can everything be outsourced? How do we know what can and cannot be outsourced effectively?

Strategic or Operational What do Businesses need?

Well they need both, operational and strategy. One is a daily activity, the other is a periodic review and planning process. The typical Finance Director often spends good parts of the month hands-on doing the numbers. Other times in the year they plan at a high level (strategic).

In meetings management teams switch as needed. Human Resources and Marketing teams often seem different. Different in that many of these leaders only do the strategy and not the operational activities on a day to day basis. Is this right?

If functions like HR & Marketing want seats at the “top table” in the way finance has, then they need to deliver both services. Delivering these services not just by their people, but by themselves too. We need to see more HR people running inductions, interviewing front line staff etc.

Outsourced the wrong things

In HR I believe that many organizations have outsourced the wrong things.

They outsource payroll, recruitment, and even day to day HR.

What HR should be doing more often are the day to day activities. Activities which impact the CULTURE of the organization on a day to day basis. Also they should hire consultants to assist with the strategic planning at the adhoc times needed. The competence for adhoc strategic development is not needed in house, as in reality it should not be used that often! If the skills and competences are not used regularly those skills will become rusty and rapidly out of date.

Is it time to rethink how we structure such functions?

Restructure from the ground up… putting the business at the centre.

For some strange reason, businesses have decided that “routine admin” is the stuff to outsource. If we think back to the 1980s & 1990s, then I guess it makes sense. Administration was labour intensive. predictable. I don’t know about you, but I have not seen that level of stability in businesses for some time. Indeed the admin varies by period and in line with customer and workloads. The core changes from year to year. Outsourcing things that change frequently is more expensive. If the admin did not change from month to month or year to year, then I would agree outsourcing should be considered.

It’s the fault of the business schools

Go back 40 years and this type of decisions was just “management”. Terms like strategic or operational did not exist in everyday business language in the way it does today. Many of the business schools saw us coming and put together research and programs which have changed the way we think about business. In reality at one level there is little difference between operations & strategy (yes this goes against what I said earlier). A good professions will float between dong the job and longer term and higher order thinking. When it comes to specialist strategy having the expertise of an expert is always useful.

Time to ‘get real’

Strategic or operational. That is the question. Can the two actually be separated in the real world? I think not. Well not for the majority of businesses. If you have tens of thousands of employees, then of course you can separate anything. For the vast majority of businesses I believe that the two cannot, and more importantly should not be separated.  Effective operations in association with sound strategy is a winning formula. get any misalignment and whilst it may still work, you will not get the value add expected.

Typically in the majority of businesses and organizations the only difference between strategic or operational is the frequency a task undertaken, and the people involved in that decision. Not the task itself.

What do you think? Can we have strategic or operational activities? Should we really be outsourcing core activities?