Fundamentals of

Business Operations
Framework for Business Operations

LESSON 2
Content

• What is Business Operations

• Frameworks for Business Operations
• The Basic Concept
• Laying Out Policies
• Processes and Procedures
• Multiple Frameworks
• Analytical Frameworks for Business Operations
• Ansoff Matrix
• Bartlett and Ghoshal’s Matrix
• Business Model Canvas
• Profit Tree
• Value Chain Analysis
• Strategic Planning in Business Operations
• Vision
• Mission
• Objectives
• Strategy
• Approach
• Tactics
Content

• Operations Design
• 3 Steps to Better Operation Design
• Execution of Initiatives
What is Business Operations?
• All companies, regardless of industry or size have a set of foundational activities required
to run the business, often called business operations.

• Successfully managing business operations requires juggling many moving parts across
multiple group with limited time and resources.

• Diligent maintenance, well-informed strategic planning, and disciplined execution is

needed to succeed.

• Success is achieved by defining great strategies and implementing them relentlessly.

What is Business Operations?
• Failure in business operations is always due to 2 reasons:
1. Bad Strategy
2. Ineffective Implementation

• Execution without strategy is chaos, thus it is important to start with setting proper
strategy and establishing targets at regular intervals, as well as developing and
maintaining effective operation.
What is Business Operations?
• Some types of Internal Business Operations in a manufacturing firm are below:

Service Sales R&D Manufacturing Service

Frameworks for Business Operations

• Frameworks for Business Operations is a guide to a company's policies, goals, standards,

procedures and training.

• These frameworks sets out the way the company does business and promotes a
corporate culture and identity.

• They may also include principles of good governance and set out company values and
divisions within the firm.

• Each framework contains different elements, each serving to its needs.

Frameworks for Business Operations

• Few types of frameworks used in Business Operations are:

• The Basic Concept

• Laying Out Policies
• Processes and Procedures
• Multiple Frameworks
The Basic Concept
• This framework generally outlines the company or management structure.

• This includes how leaders will govern the company and the hierarchy of its divisions or
management teams.

• Example, an operations framework template might set out the levels of management,
from the CEO to department heads and ordinary managers.

• Accompanying this might be a chart illustrating the corporate hierarchy. In smaller firms,
this section might simply state the corporate structure, such as the owner-operator of the
company.
The Basic Concept
• A chart as below in can help identify roles played by each leader in a company. This can
further assist each department to individually identify their targets and operate efficiently:
Laying Out Policies
• An operational framework will generally outline company policies.

• These can include guiding principles on behavior, employment and promotion. It might
also contain general guidelines for all employees to follow.

• These can include directives such as always act with fairness and integrity, support roles
must be adequately staffed and responsive, always use good governance and risk
management procedures and managers will have an open-door policy.

• These guidelines are in the framework to establish and develop a company ethos and
culture. They might also outline which markets the company will target and where it will
focus research and development spending.

• These frameworks often align with big-picture, long-term strategic goals, rather than
short-term tactical objectives.
Processes and Procedures
• Most companies include guidelines for core processes and procedures in their
frameworks.

• They may not generally list exact instructions for processes, such as how to operate
various types of equipment, but instead set guidelines for broader matters, such as how to
conduct business planning and when to do an audit.

• The framework might have procedures for managing workflow, policies for bidding on
contracts and for allocating assets to company divisions.

• It may also include specific information on procedures for hiring, facilities management
and customer relations.
Multiple Frameworks
• Most of the time, companies have more than one framework for their business operations.

• Example, a company might design a green framework, stating environmental goals for
each section of the business.

• This company may also have an innovations framework that may outline policies,
procedures and management changes the company will use to achieve the environmental
goal.
Analytical Frameworks for Business Operations

Analytical Frameworks can also be used in Business Operations. Some of them are:

• Ansoff Matrix
• Bartlett and Ghoshal’s Matrix
• Business Model Canvas
• Profit Tree
• Value Chain Analysis
Ansoff Matrix
• The Ansoff Matrix was developed by H. Igor Ansoff and first published in the Harvard
Business Review in 1957, in an article titled "Strategies for Diversification."

• It has given generations of marketers and business leaders a quick and simple way to
think about the risks of growth.

• The Ansoff Matrix (also known as the Product/Market Expansion Grid) allows managers to
quickly summarize potential growth strategies and compare them to the risk associated
with each one.

• The idea is that each time they move into a new quadrant (horizontally or vertically), risk
increases.
Ansoff Matrix
Ansoff Matrix

Market Penetration: Existing Products in Existing Markets

• Market Penetration is about selling more of the company’s existing products to existing
markets.

• To penetrate and grow the customer base in the existing market, a company may cut
prices, improve its distribution network, invest more in marketing and increase existing
production capacity.

• Example, brands such as Coca-Cola are known for spending a lot on marketing in order
to penetrate their markets.
Ansoff Matrix

Product Development: New Products in Existing Markets

• Product Development is about developing and selling new products to existing markets.

• Companies could make some modifications in the existing products to give increased
value to the customers for their purchase or develop and launch new products alongside
a company’s existing product offering.

• Example, Apple launching a brand-new iPhone every few years.

Ansoff Matrix

Market Development: Existing Products in New Markets

• Market Development is about selling more of the company’s existing products to new
markets.

• This strategy is about reaching new customer segments or expanding internationally by

targeting new geographic areas.

• Example, IKEA started off expanding to markets relatively close in terms of culture as to its
home country (Sweden) before targeting more challenging geographic areas such as China
and the Middle-East.
Ansoff Matrix
Diversification: New Products in New Markets
• Diversification is about entering new markets with new products. There are 3 types of
diversification:

1. Concentric/horizontal diversification is entering a new market with a new product that

is somewhat related to a company’s existing product offering.
2. Conglomerate diversification is entering a new market with a new product that is
completely unrelated to a company’s existing offering.
3. Vertical diversification is moving backward or forward in the value chain by taking
control over activities that used to be outsourced to third parties like suppliers, OEMs
or distributors.

• Example, Samsung’s operating businesses varies from computers, phones and

refrigerators to chemicals, insurances and hotel chains, focusing on penetrating into new
markets.
Bartlett and Ghoshal’s Matrix
• A framework that is often used to distinguish multiple forms of internationally operating
businesses is the Bartlett & Ghoshal Matrix.

• Bartlett and Ghoshal clustered these businesses based on two criteria: global integration
and local responsiveness.

• The resulting quadrants can be labelled with businesses having a global strategy,
transnational strategy, international strategy or multidomestic strategy.
Bartlett and Ghoshal’s Matrix
• Businesses that are highly global integrated have the objective to reduce costs as much
as possible by creating economies of scale through a more standardized product offering
worldwide.

• Business that are highly locally responsive have an extra objective to adapt products and
services to specific local needs.

• Together these two factors generate four types of strategies that internationally operating
businesses can pursue; Multidomestic, Global, Transnational and International Strategies.
Bartlett and Ghoshal’s Matrix
Bartlett and Ghoshal’s Matrix
Multidomestic: Low Integration and High Responsiveness
• Companies with a multidomestic strategy have an aim to meet the needs and
requirements of the local markets worldwide by customizing and tailoring their products
and services extensively.

• Example of a multidomestic company is Nestlé. Nestlé uses a unique marketing and sales
approach for each of the markets in which it operates.

• Furthermore, it adapts its products to local tastes by offering different products in different
markets.
Bartlett and Ghoshal’s Matrix
Global: High Integration and Low Responsiveness
• Global companies are the opposite of multidomestic companies. They offer a
standardized product worldwide and have the goal to maximize efficiencies in order to
reduce costs as much as possible.

• Global companies are highly centralized, and subsidiaries are often very dependent on
the HQ.

• Their main role is to implement the parent company’s decisions and to act as pipelines of
products and strategies. This model is also known as the hub-and-spoke model.

• Example, pharmaceutical companies such as Pfizer can be considered global companies.

Bartlett and Ghoshal’s Matrix
Transnational: High Integration and High Responsiveness
• Transnational companies have characteristics of both global and multidomestic firms. Its
aim is to maximize local responsiveness but also to gain benefits from global integration.

• In terms of organizational design, a transnational company is characterized by an

integrated and interdependent network of subsidiaries all over the world.

• These subsidiaries have strategic roles and act as centers of excellence.

• Due to efficient knowledge and expertise exchange between subsidiaries, the company
can meet both strategic objectives.

• Example of a transnational company is Unilever.

Bartlett and Ghoshal’s Matrix
International: Low Integration and Low Responsiveness
• An international company has little need for local adaption and global integration.

• The majority of the value chain activities will be maintained at the headquarters. This
strategy is also often referred to as an exporting strategy.

• Products are produced in the company’s home country and sent to customers all over the
world.

• Example, large wine producers from countries such as France and Italy are examples of
International Companies.
Business Model Canvas
• Business Model Canvas is a summary that tells how the key drivers of a business fit
together.

• It means showing the strategic details necessary to help a business get success within
the market.

• One important thing is that this summary’s length is within one sheet of paper.

• The Business Model Canvas is a smart and clear way to read and describe any company
with any scale ranging from the largest business to just a small one with some staff
members.
Business Model Canvas
• Below is a template of Business Model Canvas for a lemonade stand:
Profit Tree
• The Profit Tree is a simple but very effective way to structure a company’s revenue and
cost streams. It allows a company to see where improvements can be made in case of
profitability issues. Below is a Profit Tree:
Value Chain Analysis
• A company is a collection of activities that are performed to design, produce, market,
deliver and support its product (or service).

• Its goal is to produce the products in such a way that they have a greater value (to
customers) than the original cost of creating these products.

• The added value can be considered profits and is often indicated as ‘margin’. A systematic
way of examining all these internal activities and how they interact is necessary when
analyzing the sources of competitive advantage.

• A company gains competitive advantage by performing strategically important activities

more cheaply or better than its competitors. Based on this overview, managers are better
able to assess where true value is created and where improvements can be made.
Value Chain Analysis
• A company’s value chain is embedded in a larger stream of activities that can be
considered the supply chain.

• Suppliers have a value chain (upstream value) that create and deliver the purchased
inputs.

• In addition, many products pass through the value chain of channels (channel value) on
their way to the buyer.

• The value chain activities can be divided into two broader types, primary activities and
support activities.
Value Chain Analysis
• The five primary activities are inbound logistics, operations, outbound logistics, marketing
& sales and service.

• Support activities can be divided into procurement, technology development (R&D),

human resource management and firm infrastructure.
Value Chain Analysis
Strategic Planning in Business Operations

• The biggest challenge seen within business operations is lack of alignment between
initiatives and strategy.

• Often, setting a strategic plan can be overwhelming or it is a lower priority for leaders who
mainly focus on deadlines.

• However, overlooking strategic plans can be costly and cause serious issues downstream
because it’s the foundation of an organization’s future efforts.

• A strong strategic plan is key to positioning the organization for success with the right
investments, uniting the team under a single purpose, measuring performance, and
ensuring alignment across the company.
Strategic Planning in Business Operations

• Strategic planning starts with identifying an organizational vision, mission, and set of
objectives.

• A key element is to ensure the strategy has an initiative selection and prioritization
process that ensures the business uses their resources in a meaningful way.

• The business then needs to commit to a set of metrics to determine success and the
overall health of the organization.
Strategic Planning in Business Operations

During the strategic planning process, an organization must do the following:

• Builds or modifies the foundational strategic vision and mission

• Commits to goals that drive overall health of the business
• Develops a long-term plan to achieve the goals
6 Elements of Effective Strategic Planning
There are 6 elements to have an Effective Strategic Planning:
Define The Vision
• A vision provides a brief description of a company’s long-term goals.

• It’s typically ambitious and communicates how the company plans to make a difference in
the world.

• It is like a roadmap for making decisions that align with a company’s philosophy and
objectives.

• A good vision helps:

• Inspire teams and keep them focused
• Connect with customers in niche markets
• Makes smarter decisions
• Attract top talent
Define The Vision
• Visions are usually paired with mission statements to help guide planning.

• Example, Warby Parker: “We believe that buying glasses should be easy and fun. It
should leave you happy and good-looking, with money in your pocket. We also believe
that everyone has a right to see.”
Create The Mission
• A mission statement is usually part of the business plan.

• It identifies the company’s purpose and is a way to share publicly why the company
exists. Crafting a mission statement can help unify the business and stay on track.

• A mission statement should:

• State what the company does.
• State how the company does what it does.
Create The Mission
• A clear mission statement tells potential and existing customers what to expect from the
company and can provide employees with direction, inspiration, and focus.

• Example, Warby Parker: “By circumventing traditional channels, designing glasses in-
house, and engaging with customers directly, we’re able to provide higher-quality, better-
looking prescription eyewear at a fraction of the going price.”
Case Study 1 1

With just three sentences, Warby Parker’s vision statement tells exactly what the company aims to
achieve. Namely, to make the process for buying prescription glasses and sunglasses fun and
straightforward (unlike the traditional method). The vision also aims for customers to have
fashionable frames, but at a lower cost than existing options.

The last sentence of the vision statement adds in a purpose statement: “We also believe that
everyone has a right to see.” Since the beginning, Warby Parker has touted its “Buy a Pair, Give a
Pair” program that donates glasses to people who can’t otherwise afford them. According to the
CEO, this purpose is what motivates employees to join and stay with the company.

Througt the mission statement, the founding team had to find a way to lower prices and increase
quality, while also turning a profit. The resulting actions included bringing many traditionally
outsourced services in-house, such as design and consumer marketing/sales.
Set Objectives
• Objectives are specific results that a company aims to achieve within a time frame.

• Defining success early lets the company know if they are on the path to achieve their
mission and vision.

• Clearly articulating objectives creates goals that can measure a company’s overall health
and the impact of strategic initiatives.

• Good objectives should be clear, measurable and be supported by multiple strategic

initiatives across the organization.
Develop Strategy
• A strategy is a long-term plan that enables an organization to achieve their objectives.

• An effective strategy brings together vision and execution. Strategies are much more
specific than an organization’s vision, mission, and objectives.

• They are typically only shared within the organization and ideally built around their needs
and market context.

• Strategies should map long-term plans to objectives and actionable steps, foster
innovative thinking, as well as anticipate and mitigate potential pitfalls.

• Strategic plans often look out 3-5 years, and there may be a separate plan for each
individual objective within the organization.
Case Study 1 1

While Warby Parker isn’t a public company and is not legally required to release annual financial
statements, the organization does voluntary release an annual impact report. The report provides a
window into the company’s strategic objectives with the inclusion of priority issues relevant to both
stakeholders and the company. In their recent report, the top issues cited are the Buy a Pair, Give a
Pair program, customer experience, innovation, product safety, and responsible sourcing.

Warby Parker’s relevant objective might be aimed at growing the program, while the innovation
priority may be tied to the objective of innovating to meet the strategic vision and mission.

According to research, 2.5 billion people around the world lack access to affordable glasses to learn
and work. In order to make a positive impact, Warby Parker needed to develop strategies to continue
chipping away at that need, as well as meet company objectives, mission and vision.
Outline the Approach

• An approach provides a methodology for executing strategy.

• The approach is a framework for answering key questions that will later determine tactics.
Plus, it guides an organization on how to execute the strategic plan.

• Each strategic plan should include an approach that guides the leadership team in their
analysis and plan execution.
Get Down to Tactics
• Tactics are focused initiatives, projects, or programs that allow organizations to execute a
strategic plan.

• Tactics are the key to execution. They are the actions taken to make it all happen.

• Effective tactics should always tie back to the strategy, objectives, mission, and vision of
the company.
Case Study 1 1

Within the Warby Parker, each strategic plan included an approach that guided the leadership team in
their analysis and plan execution.

Warby Parker has a Pupils Project expansion and the launch of the contact lens brand Scout.

When it came to expanding the Pupils Project, the Warby Parker leadership team needed an
approach for addressing each key decision for the program.

There were 2 approaches, whether to partner with existing non-profits or create its own program and
how to make the greatest impact with the funds available.
Case Study 1 1

Within each decision Warby Parker made, the company used different tactics to move it from an idea to
actual product or program.

For the Pupils Project at Warby Parker, the company choose to have the nonprofit partners run the
screenings while Warby Parker provided the glasses and had the students choose their styles from 40
options in a truck show.

One necessary tactic was bringing together the design and logistics teams to narrow down the style
options that would be appealing to kids, cost effective, and easy to produce in large numbers.
Operations Design
• Operations Design establishes the systems, processes, rhythms, and templates an
organization uses to run their business on a day-to-day basis.

• An operations ecosystem ensures that the business’s team has the right set of tools for
completing work and that those tools produce useful information for leadership without
overburdening the team.

• Creating the environment for the team and getting it right is important. Well-designed
business operations environment can streamline the team’s workload, which allows
management to focus on important things such as enacting their strategy.

• A poorly designed environment can have huge negative impacts on team morale and
ultimately the business.
3 Steps to Better Operation Design
• A company with effective business operations runs like a well-oiled machine, which
benefits its customers, employee satisfaction, and bottom line.

• A good business operations system is a collection of processes, tools, templates,

timelines, and rhythms of a business that are interconnected and work together.

• Without a well-designed system, the best strategies and the best execution can fail.

• 3 key steps for success in Operations Design:

• Set Non-Negotiable System Objectives

• Design Effective Systems
• Keep Systems Running
3 Steps to Better Operation Design
SET NON-NEGOTIABLE SYSTEM OBJECTIVES
Align to Corporate Timing and Standards
• For companies to be successful, they need clarity on how they fit into the larger context of
the organizational system.

• Designing operations and systems without considering internal and external impacts may
create confusion, inconsistencies, and inefficiencies.

• A business operations system should align, support and balance existing corporate
systems.
3 Steps to Better Operation Design
• As there can be multitudes of information to gather, organize, and consider, we
recommend creating a comprehensive timeline of the overall work is required in the
companies’ teams.

• While timelines are often deployed and leveraged at an initiative level, they are often
overlooked as a tool for the broader companies.

• With context and relevant timelines, more effective operations and systems can be
developed.
3 Steps to Better Operation Design
Create Transparency Among Strategy, Initiatives, and Metrics
• Operations design should always tie back to the strategic plan, which will sustain progress
and ensure the company achieves the right goals.

• Often, companies separate operations design from their strategy, viewing them as two
isolated pieces of the business.

• Without creating and maintaining transparency among teams, information is inconsistent,

and success becomes less attainable.
3 Steps to Better Operation Design
DESIGN EFFECTIVE SYSTEMS
Design for Everyone
• Any system design is only as good as the participation in it.

• All teams and relevant stakeholders must be able and willing to execute the processes,
use the tools, and adhere to the rhythms that is established.

• A common mistake that usually happens is a business operations system designed

exclusively for the company’s leader.

• While this may sound logical at a macro level, it often results in a system that is a burden
to the rest of the team.
3 Steps to Better Operation Design
Streamline and Automate
• One of the easiest ways to drive the adoption of a newly introduced business operations
system is to reduce everyone’s workload.

• First, start with the most critical processes and evaluate them for improvement. Determine
which steps are adding value and which are not.

• Be sure to investigate which tools or processes make life easier. Potential breakage
points, which are potential innovation areas must be identified.

• Example, implementing a simple portal with the agenda for this month’s business review
can save hours in email conversations.
3 Steps to Better Operation Design
Ensure Discoverability of Content and Information
• A well-run team is a well-informed team. If the systems and tools don’t allow the team to
find what they need, they will disengage or spend time asking for help.

• Keep information accessible and organize resources in logical categories.

• Example, design tools and processes that leverage a consistent set of colors or icons to
make things easy to identify throughout the system.
3 Steps to Better Operation Design

KEEP SYSTEMS RUNNING

Training
• Effective training helps the system operate correctly.

• Approach training proactively. Some people need support for software, while others might
need communication skills.

• Don’t expect stakeholders to figure it out on their own. Eventually they may, but it will be
inconsistent across the company and at the expense of other key initiatives.

• Offer support early and often.

3 Steps to Better Operation Design
Communication
• Communicating any updates or changes to a business operations system is crucial. If
communication is late or unclear, there is a risk of team members losing trust and
participation in the system.

• Buy-in is much tougher to achieve when employees are confused or doubt the approach.

• Build a consistent feedback loop and implement changes as appropriate (or explain why it
wasn’t implemented).

• Be sure to continue communication throughout the change to increase the rate of

adoption and signal the effort’s priority.
3 Steps to Better Operation Design

Expectations
• Effective business operations system changes require that the business lead set proper
expectations.

• Confusion about expectations can be a huge cause of stress in the workplace.

• Set clear expectations on how individual team members contribute to the system and
report on the status regularly. Ensure the timeline and meeting cadence is clear.

• The team needs to adhere to the business operations system and meet key milestones.

• Team members should also understand suggestions and modifications are always
welcome, but participation is a requirement.
Execution of Initiatives

• Execution of Strategic Initiatives goes beyond Project Management.

• The three tenets of Successful Initiative Execution are Discipline, Transparency, and
Efficiency.
Execution of Initiatives
Discipline
• Discipline is the art of creating a consistent code of behavior within the team.

• Disciplined strategic initiatives share the following common attributes: Outcome-Focused,

On-Time and On-Budget, and Quality-Focused.

Outcome-Focused
• Projects can be long, overwhelming, and riddled with challenges. The team needs to
maintain a focus on the desired outcome.

• A lack of focus on the outcome puts the team at risk of spending time, energy, and
budget focused on the wrong goal.
Execution of Initiatives

• Teams that lead successful initiatives ensure all actions lead to the desired outcome,
even when leaders aren’t present.

• Implementing outcome-focused discipline ensures that even if other issues arise, the
team is still marching toward a common goal.
Execution of Initiatives

On-Time and On-Budget

• Keeping control of timeline and budget is key to driving discipline within the team.

• The smoothest, most successful initiatives include transparency into upcoming

meetings, team member vacations, key deliverables, and milestones.

• Budget must be reviewed regularly to account for previous and upcoming expenses.

Quality Focused
• Disciplined initiatives produce high-quality work products.

• Successful initiatives have a system and standards in place to ensure every piece of
work is well informed, aligned to other projects or initiatives, reviewed with
stakeholders, and approved by leadership.
Execution of Initiatives
Transparency
Transparency means creating an environment where information is open, available, and
shared appropriately with key initiative participants.

Efficiency
An efficient initiative or project is methodical, ordered and avoids redundant work, and is
successful.
Summary

• What is Business Operations

• Frameworks for Business Operations
• The Basic Concept
• Laying Out Policies
• Processes and Procedures
• Multiple Frameworks
• Analytical Frameworks for Business Operations
• Ansoff Matrix
• Bartlett and Ghoshal’s Matrix
• Business Model Canvas
• Profit Tree
• Value Chain Analysis
• Strategic Planning in Business Operations
• Vision
• Mission
• Objectives
• Strategy
• Approach
• Tactics
Summary con’t

• Operations Design
• 3 Steps to Better Operation Design
• Execution of Initiatives
Q&A Session