One of the recurring themes of business, and social organizations, is the perceived need to refocus in light of changing demands or needs. What we conceive of as “operations” brings with a set of assumptions about the necessary adjustments to an organization in its line of business, focus, and mission. To be clear in the statement of the claim, we have to be clear about what it means to modify the current strategy.
A grand strategy, or mission statement, is related as the strategy should, if executed, lead to the outcomes specified in the mission statement. Therefore the assessment of the correctness of the strategy, is a prediction problem, and one would consider that, for example, the approval of a CEO by the board, acts as an approval of the strategic direction’s viability to achieve the mission statement.
Strategy deviations occur for many reasons, such as staff failure and supply chain issues. Sometimes we talk about “plans” but the strategy is a plan, so to say “strategic planning” or similar phrasing is RAS syndrome. We assess the performance of the organization which may (or may not) be following the strategy, and may choose to modify the strategy; that my troops failed to penetrate enemy lines because of unprecedented cowardice, does not necessarily indicate that the strategy was incorrect (remembering that omniscient optimal is not the same as correct).
Therefore, for a change in the strategy to be correct, at least one of two conditions must be true:
- The strategy will not be optimal under anticipated future conditions
- The strategy was or will be optimal, but the mission statement of the organization is not optimal; therefore, to better align to the more correct mission statement, the strategy must be changed
Typical usage of “operations” includes a significant amount of adjustment to the future conditions, particularly in regards to supply chain management, staff compensation, resource allocation, etc. At the C-suite/executive/board levels, most such adjustments already are beyond the scope of these individuals’ control (e.g. because they do not physically have the time to hire all the needed staff), and hence in a strategy decision, the scope of operational adjustment is included.
Thus, the adjustment to anticipated future conditions must be drastic, to exceed the ability of operations to adapt within the bounds of the current strategy. Such drastic consequences could include becoming capital or even profit net-negative, inability efficiently to reach large portions of the population the nonprofit notionally services, or supply chain shortages resulting in the inability to sustain operations. In these types of situations, the utility of committing organizational (shareholder, nonprofit trust funds, etc.) resources, comes into question, and so in order to avoid e.g. gross waste, the decisions to proceed have to come before the stakeholders, who could choose e.g. to sell their shares or to withdraw from the organization.
As for the mission statement being incorrect: shareholders, donors, volunteers, etc. pledge their resources under a fiduciary duty or similar, according to that charter. Hence to change the strategy under normal conditions, amounts to changing the charter without board approval, and using the stakeholders’ funds in an arbitrary way, which is a gross breach of duty, contract, etc.