Translating Your Strategy To Operational Efficiency

By M. Isi Eromosele

In this era of knowledge workers, strategy must be executed at all levels of an organization. In the process of implementing this, people must change their behaviors and adopt new values.

The key to achieving the above transformation is putting strategy at the center of your management process; strategy that can be readily understood and easily described.

If you are going to create a management process to implement strategy, you must first construct a reliable and consistent framework for describing the strategy.

In today’s knowledge-based economy, sustainable value is created from developing intangible assets, such as the skills and competency of your personnel, the underpinning technology that supports their work and building a corporate culture that encourages innovation and collaborative problem solving.

Indirect Strategic Value

Strategic value is indirect. Intangible assets such as knowledge and technology seldom have direct impact on the financial outcomes of revenue and profit.

Improvements in intangible assets affect financial outcomes through chains of cause-and-effect relationships involving two or three intermediate stages, such as:

• Investment in employee training lead to improvements in service quality
• Better service quality leads to increased customer loyalty
• Higher customer satisfaction leads to increased customer loyalty
• Increased customer loyalty generates increased revenue and profit margins

Contextual Strategic Value

In translating strategy to operational implementation, value is contextual. The values of intangible assets depend on organizational context and strategy. They cannot be valued separately from the organizational processes that transform them into customer and financial results.

The value of intangible assets depends critically on the context – organization, the strategy and the complimentary assets in which the intangible assets are deployed.

Potential Strategic Value

Strategic value is potential. Tangible assets, such as property and equipment, can be valued separately based on their historic cost or on various definitions of market value, such as replacement cost.

Today, companies can measure the cost of developing their intangible assets, which may include employee training, spending on technology and marketing to raise brand awareness. Such costs are poor approximations of any realizable value created by investing in these intangible assets.

Intangible assets have potential value, but not market value. Organizational processes, such as design, delivery and service are required to transform the potential value of intangible assets into products and services that have tangible value.

Strategic Assets Are Bundled

Intangible assets seldom have value by themselves. As such, intangible assets must be bundles with other assets – intangible and tangible, to create value.

The strategic value does not reside in any individual intangible asset. It arises from creating an entire set of assets along with a strategy that links them together.

This provides a new framework to describe a strategy by linking intangible and tangible assets in value creating activities.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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