Strategic Choices and Operational Execution

The best strategic choices will not outrun the results of poor operational execution. The best operational execution will be limited in performance by the quality of strategic choices. Both must be in alignment.

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From a risk management standpoint, it is very rare that a business with great operational excellence will fail even with a bad strategy - performance will just be limited. 

If your performance is consistent but falls below industry benchmarks, then it is very likely a strategic choice issue. The consistency indicates that the machine (company) is performing well but the road(s) chosen are congested or full of potholes. Look at all your scoreboard metrics and beyond when evaluating. 

If your performance is inconsistent, especially project turnout as compared to budget but your overall outcomes are still at or above industry benchmarks, then it is likely an operational excellence issue. 

From a risk management standpoint, this is much worse because of the volatility. Travelers Surety identified that 60% of contractor failures are due to a single catastrophic project. Several projects going poorly at the same time will end just about any contractor.


 

No strategic choice or management system for operational excellence lasts forever. Both must be evaluated and often changed with each stage of growth

Just like that road that started out with plenty of capacity and no potholes will become a traffic jam over time, and without the right money invested into maintenance will become full of potholes. Every market sector and project owner's construction programs go through cycles like this.

The behaviors (culture), org structures, processes, and tools that delivered consistent results with 50 people don't linearly scale to support 150 or 500 people. 


 

The reality is that this is rarely a binary choice. There are multiple factors involved including a wide range of people. An experienced and unbiased 3rd party can be invaluable for helping you objectively evaluate your balance between strategy and operational excellence while ensuring your have the talent to support your decisions.

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Related Training

Strategic Foundations: What Is Unlikely to Change?
Like construction projects, construction businesses are only as strong as their foundations. Build your strategies around things that are unlikely to change in the long-term (10+ years).
Opportunity Evaluation (2 Critical Dimensions)
Your strategic decisions show up most vividly in the opportunities you choose to pursue. Disciplined and aggressive business development will ensure a strong pipeline of opportunities. Choosing what to pursue requires balancing two critical dimensions.
Headcount, Stages of Contractor Growth, and Growth Inflection Points
Every contractor will navigate very predictable stages of growth. Each of these represents about a tripling of headcount and requires different leadership focus, strategies, structures, and systems. Stress and failure points are also very predictable.