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To the frustration of many an operations executive, that old rule rarely yields success in today’s decision-making and prioritizing processes. To understand why this is happening, let’s look at some common environmental issues confronting most organizations:

There is intense pressure to reduce operating expense. This pressure has been increasing quarter after quarter and year after year going back to 2009. This sustained pressure on operating expenses has dried up several traditional sources of improvement—low-hanging fruit and budget variance. As one client recently stated, “Low-hanging fruit is now 25 feet up the tree and can’t be reached without the IT ladder, which we don’t have access to.” Reliance on favorable budget variances has been replaced, with many heading into 2012 with an undefined, unfavorable budget gap.

Growth is the main challenge most insurance organizations are focused on these days. Pursuit of growth opportunities is interrelated with expense pressures. Growth can ease pressure on expenses, but expense reduction often funds growth initiatives. Resources will flow to growth initiatives and away from traditional operations improvement efforts—specifically, IT resources.

So how can a COO improve effectiveness in 2012? We think a big part of the answer is understanding what most CIOs had to learn in previous decades: improvement efforts have to be aligned with overall corporate strategy. Operational improvement efforts that are integral to an improved growth strategy have a fighting chance of approval and implementation. Standalone operational improvements will be DOA.

Recently, we have helped several clients develop and implement these growth and operational improvement strategies. If you would like to learn more or receive related case studies, let me know.