It concerns me that over 85% of my readers have little if any experience in Operations Management. Since there is such an alarming number of business people who lack operations management experience, I’ll focus on some of reason of what caused that to happen and what can be done about it.
Definition:
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Operations management refers to the administration of business practices to create the highest level of efficiency possible within an organization while being concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.
- The design, execution, and control of operations that convert resources into desired goods and services, and implement a company’s business strategy.
Takes Time to Gain Experience
My operational management experience was gained from my 40 years of being an Operations Manager. Now, I know anyone getting to work anywhere for that long is nearly unheard of in today’s world of fast track job hoping executives. Their average length of employment anywhere is just over 2 years. It is this lack of focus…or in many cases, lack of job stability…in today’s business world that keeps people from gaining valuable experience in how a business operates.
As a result, little is gained from the short exposure to any operations management experience. This is the first reason there are so few of us experience operations managers.
OK, let’s get the Old Fart sigma you have out of the way. Yes, I am a lot older than 90% of you. But, that does not mean I don’t know what is going on in the world today. I know where the business world has been which allows me to know where we are going in the business world.
So, let’s get over the “You’re over the hill” tag you want to put on me and move on to giving you some insight into what is killing business today.
Marketing At All Costs Killed the Economy
Years ago, back when the economy was booming, many businesses saw Marketing as what was floating their boat. In a robust economy it was easy to sale people anything. However, it usually took some kind of very expensive elaborate marketing campaign.
In an effort to keep these companies sales moving upwards many of the college board of regents developed college business degrees and master degrees to keep these positions filled with well educated managers. As a result they flooded the market with very well educated Marketing Executives with no experience. In that era of booming business this was good.
What was not promoted during this era of robust spending was what was really making these businesses successful during the booming economy. Sorry to say, it was not marketing.
Marketing group’s shine came from the very strong work ethics of those business’ operations personnel. It was the operations directors who were keeping the marketing directors nose clean..literally in most cases, by only allowing the company to market and sale what the operations can safely produce.
Things started changing to the worse around the time the first wave of college degreed MBA Marketing Directors moved in to take control. Unfortunately, by this time the economy was slipping downward. This meant the budgets for nearly every business in every industry became frozen. These new marketing directors were told if they wanted to raise their salary they would have to find funds within their current budgets.
Kill Operations
So, where did the marketing directors go to get their raise?
These companies had, over the years, made huge investments in developing very expensive Marketing Departments. Since most of the business executives sold their stockholders on the need for the best marketing talent in the world there was no way for them to politically pull back on the reins of their large Marketing Budget and still keep their promises.
Naturally, since these marketing executives had no experience in knowing the power of the company’s operations the marketing directors set their target on the company’s operations budget as their source to feeding their needs.
To cut to the chase, for the past 20 years most mainstream businesses became ‘marketing heavy’. Many companies marketing groups would push their operations way beyond their capabilities by sell things they could not deliver.
Everything the marketing executives needed for venture capital would come from their operations budget. As a result, there was no incentive to be an operations manager. In many cases over the year many operations directors would jump to the marketing departments so as to be part of the wage increases being liberally dealt out.
Now, 25 years later, the colleges are still pushing out marketing heavy business degrees and will continue as long as companies still pay larger salaries to marketing directors than they do to their operations directors. A huge vacuum of lack of experience in most business’ operations has developed as a result of there being anyone interested in working in Operations.
Today, most businesses are very weak operationally. Most operations directors have less than five years of experience. This means when it comes time for the company to make a change to a more profitable plan there is usually not anyone who will stand up to the marketing directors who will direct the company to sale something the operations cannot deliver. Thus, consumers expectations on the product service will wain and eventually cause the business to be in the business of ‘Going Out of Business’.
The Value of Experience
It is a fact it takes revenue for a business to ever become profitable. It is also fact that it takes a strong marketing campaign to increase the sales needed to push a business to profitability.
However, if the business can no deliver what is being marketing it cannot, and will never, become profitable.
Businesses today need to weight the value of their Operations against their Marketing capabilities. Having someone experienced in the companies operations adds tremendous value to the business and improves the company’s chance to achieving profitability.
The more experienced an operations manager is the faster a business can move to developing a sound marketing strategy.
How does someone gain experience in operations?
The answer to this question is simple. Business leaders should recruit someone who has worked through the changes in the economy over the past 15 years. Bring them onboard to share that experience with the operations staff. This will build a base on the company to pull from over the long term.
For those interested in gaining more operations management knowledge you should search for the businesses who have an individual on their operations staff who has experience and then go to work for them to learn from them.
The value of a business would be based on the strength of their operations more so than their marketing. A sound operations can get a company through hard times..and yes…there are hard times coming soon.
Let me know how I can help.
