Managing strategy through business processes

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Managing strategy through business processesNuran Acur a & Umit Bititci ba Center for Industrial Production, Deptartment of Production , Aalborg University ,Fibigerstraede 16, Aalborg, DK-9220, Denmark E-mail:b Centre for Strategic Manufacturing , University of Strathclyde , DMEM, Glasgow, UK E-mail:Published online: 15 Nov 2010.

To cite this article: Nuran Acur & Umit Bititci (2003) Managing strategy through business processes, Production Planning &Control: The Management of Operations, 14:4, 309-326, DOI: 10.1080/0953728031000117977

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PRODUCTION PLANNING & CONTROL, VOL. 14, NO. 4, JUNE 2003, 309–326

Managing strategy through business processes

NURAN ACUR and UMIT BITITCI

Keywords operations strategy, performance measurement,business processes

Abstract. The work presented in this paper, following an indepth review of literature, developed a set of requirements for aDynamic Strategy Management Process. Having evaluated theexisting strategy management frameworks, models, methodolo-gies, tools and techniques, the research concluded that althoughall approaches reviewed collectively met all the requirements,individually none of the approaches fulfilled all of these require-ments. To fulfil these dynamic strategy management processrequirements, PROPHESY (Process Oriented PerformanceHeaded Strategy) was developed. The paper describes insome detail, the evaluation of the PROPHESY process anddemonstrates its application through a case study. The paper

concludes that strategy should focus on creating value that isindependent for each business unit. This means developing hor-izontal strategies that have objectives of co-ordinating businessprocesses and developing objectives that encourage the sharingof resources and skills.

1. Introduction

The global manufacturing environment has beenchanging rapidly. Today’s globally competitive environ-ment is complex, dynamic and unpredictable. To dealwith this level of change, uncertainty and complexitycompanies need to develop and review their strategiesalmost continuously to stay ahead of the competition

Authors: Nuran Acur, Center for Industrial Production, Deptartment of Production, AalborgUniversity, Fibigerstraede 16, DK-9220 Aalborg, Denmark, E-mail: [email protected] andUmit Bititci, Centre for Strategic Manufacturing, University of Strathclyde, DMEM, Glasgow,UK, E-mail: [email protected]

Nuran Acur, PhD, MSc, BSc, Assistant Professor at Aalborg University. Nuran is a graduate ofthe Yildiz Technical University (Turkey) where she gained a BSc in Statistics. This was followedby a Masters degree in Statistics from Istanbul University (Turkey). In 1996 Nuran began aMasters degree in Operational Research at Marmara University (Turkey). The following yearshe came to the University of Strathclyde (UK), where she gained a PhD in StrategicManagement. She was also actively involved in a number of project management and consultancyassignments, directly relating to facilitating strategy development, with companies i.e. SunMicrosystems, Steven Clark Ltd., Meyer & Burger, Worldmark Ltd. After graduation, she joinedWorldmark as an Engineering Consultant. During this period she developed a detailed under-standing of Strategic Management and Quality Management. She then joined the AalborgUniversity as an Assistant Professor where her research focused on manufacturing integration,benchmarking and operations strategy. She works on the development of theories and methodsfor industrial system design and application process for service and manufacturing industries.

Umit Bititci, PhD, CEng, MIEE, FIOM, MILT, Professor at the University of Strathclyde,also the Director of the Centre for Strategic Manufacturing (CSM). Currently, the Chairman ofIFIP WG5,7 specialising in integrated production management and a Vice Chairman of theInstitute of Operations Management. As a management professional, consultant and an academiche has 18 years of experience working with a wide spectrum of UK, European and Asian companieson Strategy Management, Performance Measurement, Value Development, Business ProcessImprovement, TQM and ERP. This broad range of experience has developed through a seriesof long term professional relationships with organizations in a variety of sectors including engineer-ing manufacturing, fast moving consumer goods, construction, electronics, white goods, textilesand printing as well as the service and public sectors. As the Director of CSM, an organizationdedicated to facilitating performance improvements in manufacturing industries, he has beenresponsible for a number of European and UK funded research and development programmes.Umit has published three edited books and over 100 papers in international journals and confer-ences.

Production Planning & Control ISSN 0953–7287 print/ISSN 1366–5871 online # 2003 Taylor & Francis Ltdhttp://www.tandf.co.uk/journals

DOI: 10.1080/0953728031000117977

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(Feurer et al. 1995, Mintzberg et al. 1999). Within thisdynamic environment strategy management requiresconsiderable resources and effort in terms of managerialtime, with increasing pressures for innovation, knowledgesharing and co-operation.

The success of a business, and in particular a manu-facturing business, involves the co-ordination of a num-ber of resources tasks and actions to meet both thestakeholders’ requirements and the organization’s objec-tives. Management of strategy, intended or emergent, hasbeen one of the key tasks for managers and researchersthroughout the 1980s and 1990s. The need for anapproach to strategy management has been recognizedby a number of practitioners and researchers (Pearce andRobinson 1988, Anderson et al. 1991, Feurer et al. 1995,Kaplan and Norton 2001). To deal with the problem ofhow to formulate, deploy and review strategy manyapproaches to strategy management approaches havebeen developed. The focus of these approaches can beclassified, according to their scope of application, asfollows: Business wide, Operational–Functional oriented,Operational-Business Process oriented.

There have been comparatively few attempts tobusiness wide strategy management (Acur 2001) mostof which are highly conceptual. They have a number ofdistinctive stages with limited feedback between them.Furthermore, most business wide approaches onlygeneral guidelines into the practical process of strategyformulation and management. On the other hand, func-tional oriented approaches place greater emphasis on thepractical process of operation/manufacturing strategyformulation and implementation. Business processesoriented approaches attempt to combine the rigour ofthe business wide models with the perspective on strategyformulation in which business processes are central.

The main objective of the work presented in this paperhas been to study ‘strategy management’ concepts,frameworks, methods, tools and techniques to develop a

better understanding of the effect of managing strategy through

business processes. The paper is structured as follows: Firstthe research methodology employed for this research isoutlined, then the theory-building phase is summarizedand the PROPHESY approach is introduced. Thetheory-testing phase of the research is illustrated througha case study. Finally the main learning points of theresearch are discussed in some details.

2. Methodology

The research methodology behind the work presentedin this paper consists of a theory-building phase, a theory-testing phase and a synthesis phase. Each phase has anumber of stages:

. Theory-building (Identification of what is required,Development of the research instrument, Validationof the research instrument).

. Theory-testing action research based experiments(Four in-depth case studies, Analysis of each casestudy).

. Synthesis (Cross case analysis, Conclusions).

Theory-building started with an in-depth review ofliterature covering strategic management, operationsmanagement, performance measurement and businessprocess management. This review led to the developmentof a set of requirements for a Dynamic StrategyManagement Process. A critical evaluation of the existingstrategy management frameworks, models, methodolo-gies, tools and techniques were carried out in terms ofcomparing these available approaches to the definedrequirements. This evaluation concluded that althoughthe approaches reviewed collectively met all the require-ments, individually none of the approaches fulfilled all ofthese requirements. Based on these finding a new opera-tions strategy management process (i.e. the researchinstrument), namely PROPHESY, was developed bythe researchers to fulfil the requirements identified.PROPHESY was documented in the form of a work-book. The research instrument was validated through:

. A structured and close-ended questionnaire, whichwas completed by 22 managers from 17 organiza-tions through detailed face-to-face interviews.

. Three workshops involving 40 managers, in groupsof two or three, attempting to apply the researchinstrument (i.e. PROPHESY) in their own organi-zations.

The theory-testing phase of the research was designedaround action research principles where application ofPROPHESY was facilitated by the researchers in fourdifferent manufacturing companies. Data was gatheredduring and after the intervention. Case notes were care-fully maintained ensuring that all relevant observations,discussions and comments were recorded. Post interven-tion analysis, using the case data contained in thePROPHESY workbook and case notes, allowed theresearchers to draw out the learning points pertinent toeach case.

The synthesis phase involved cross analysis of the fourcase studies and the findings of each case study which ledto the development of a better understanding of :

. The effect of managing strategy through businessprocesses.

. The benefits and limitations of PROPHESY andother approaches similar to PROPHESY.

310 N. Acur and U. Bititci

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. PROPHESY in the context of existing strategymanagement paradigms.

3. Strategy management: What is required?

The work presented in this paper, following an indepth review of literature, developed a set of 23 require-ments for a Dynamic Strategy Management Process asillustrated in table 1. Unfortunately, due to space limita-tions, it was not possible to include the full literaturereview and arguments supporting the 23 requirements,however the table in the Appendix identifies the sourcesof the literature upon which the requirements are based.The full literature review and argument leading to theserequirements has been publishes as part of a thesis (Acur2001). The foundation of these requirements was basedon:

. Strategy management should be viewed as aBusiness Process.

. Strategy management process needs to include theperformance measurement process as inputs as wellas outputs

. The strategic objectives need to be systematicallydeployed down to business processes, rather thanfunctions because there are the processes that gen-erate value for the business.

These requirements suggest that strategy management isviewed as a business process. In this context StrategyManagement is defined as ‘the business process bywhich a business develops, deploys, implements, moni-tors, reviews and re-develops its Operations Strategy’.This structure is illustrated in figure 1 and argues thatas the operate and support processes represents the opera-tions of a business, therefore, they should also representthe unit of analysis from an Operations Strategy point ofview. This figure illustrates that an organization’s opera-tions strategy should consist of consolidation of its operateand support process strategies after taking into accountthe potential conflicts. The advantage of the structure isthat it provides multiple-entry points for redesign andredevelopment of the organization strategy.

The research continued by critically evaluating theexisting strategy management frameworks, models,methodologies, tools and techniques, which have beenclassified as illustrated in table 1 according to theirscope. This review, the results of which are also includedin the Appendix, concluded that, although theapproaches reviewed collectively met all the require-ments, individually none of the approaches fulfilled allof these requirements. For example, Pearce andRobinson (1988) fulfilled about 50% of the requirements,Cambridge approach (Platts et al. 1996) fulfilled about36% of the requirements, Balance Scored Card (Kaplanand Norton 2001) fulfilled about 63% of the require-ments. Hence, to fulfil these dynamic strategy manage-

Managing strategy through business processes 311

CorporateStrate gy

Business UnitStrate gy

Does the adopted strategy

continue to meet corporate,

business unit objectives?

Con

solid

ate

and

Tra

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S upport Proce ssStrate gy

Operations Strategy

How is each

Business Unit

going to compete?

How will each operate

process contribute towards

Business Unit Strategy? What does each

operate process

need to do?

How will each process

contribute through

Corporate Strategy?

What business do we

want to

be in?

How can Support

Process contribute

towards the Operate

process strategies?

What does each

process need to do to

fulfill broader

corporate requirements?

How does each Business

Unit contributes towards

corporate strategy?

Operate ProsessStrategy

Figure 1. A business process focused view of strategy management process.

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ment process requirements, PROPHESY (ProcessOriented Performance Headed Strategy) was developedas a research instrument. PROPHESY process is docu-mented in detail in a workbook format (Acur and Bititci2001, 2002).

4. Development of the research instrument:PROPHESY

This section briefly outlines how PROPHESY wasdeveloped by the researchers to fulfil the requirementsstated in the previous section.

Literature review demonstrated that almost allapproaches to strategy management process have gotthree stages, which are inputs, formulation, and imple-mentation. However, addition of one other stage, i.e.learning and review, was deemed necessary due to thefollowing reasons. In some cases actual implementedstrategy can be very different from what it was initiallyintended. In such cases actual strategy can be describedas an emergent strategy (Mintzberg et al. 1999).Mintzberg (1998) expresses that strategies can emergeas a result of a variety of factors. They argue that astrategy can be planned or can be emerged as a pattern,which can be seen retrospectively. They consider that it isimportant for the organization to recognize emergentstrategies, as the emergent strategy will have an impacton the process of formulating a strategy. An emergentstrategy will have played a part in the formulation ofcurrent behaviours and values held within the operationand the organization as a whole. Therefore, it wasdeemed important to continuously compare intendedand emergent aspects of a strategy in order to learnfrom previous experiences and to use this strategic knowl-edge as an input to strategy formulation.

Business environment is in a state of continuouschange; therefore it is important to continuously monitorthe intended strategy, understand the reasons behindunrealized strategy and capture the emergent strategycontinuously and ensure that the emergent strategy isformalized and deployed as a closed loop control system– Requirement 3 in the Appendix. The application of‘closed loop’ strategy management process is based on afurther development of Deming’s PDCA (Plan-Do-Check-Act) cycle as seen in Hoshin Planning (Cowleyand Domb 1997, Babich, 1999). Here the objective isnot only to monitor progress, it is also about learningfrom past events, to keep the strategic situation up todate, and to assess the efficiency, effectiveness as well asevolution of the adopted strategies that drive businessperformance and competitiveness. These four stages tostrategy management process are shown in figure 2which provides an overview of the PROPHESY process.Having defined the four phase of the strategy manage-ment process, this research reviewed the relevant strategyand operations management concepts, methodologiestools and techniques and selected the most appropriateones to develop the detailed PROPHESY methodology.Table 2 summarizes, for each stage of the PROPHESYprocess, the appropriate selection, the alternatives andthe rationale for the final decision.

5. Validation of the research instrument:PROPHESY

The research instrument developed, i.e. PROPHESYwas validated using two different methods.

A structured close-ended questionnaire was developedbased on the 23 requirements identified earlier in theresearch. The questionnaire was administered to 20 man-


Table 1. Strategy management deployment approaches.

Scope Approaches to strategy management Strategy levels Focus

Business wide Digman (1990), Pearce and Robinson(1988), Thomson and Strickland (1990),Goodman and Lewless (1994),Andrews (1987), Wheelen and Hunger(2001), Chakravarthy and Lorange (1991),Lynch (1997), FOCUS (2001)

CorporateBusiness or business unit

Mission, purpose, businessunits, sustainability

Operations – Functionaloriented

Skinner (1969), Fine and Hax (1985),Schroeder et al. (1986), Leong et al. (1990),Anderson et al. (1991), Hill (1993)Platts et al. (1996), Hull and Wu (1997)

CorporateBusiness or business unitOperations/manufacturing

Functional and operationalbusiness unit support

Operations – BusinessProcesses oriented

Edward and Pepard (1994), Talwar(1993), Feurer et al. (1995), Babich (1999),Kaplan and Norton (2001)

CorporateBusiness or business unitBusiness Processes

Processes and businessunit support

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agers from 17 different organizations. The result of theseinterviews are summarized as follows:

. 78% of participants (executives and managers)demonstrated their eagerness for the approach.

. 85% of participants had a good understanding ofbusiness processes and agreed that strategy manage-ment through business processes would provide abetter approach rather than managing strategythrough functions.

. 65% predicted that the effectiveness of their com-pany’s strategy would be improved using a processbased approach, like PROPHESY.

Three workshops involving 40 managers were held.The objective of the workshop was to get the managersto use the PROPHESY workbook in a controlled (i.e.class room) environment and judge the potential valueof the approach against criteria they deemed important.At the start of each workshop managers were asked howthey would judge strategy. At the end of the workshop,having experienced a simulated application of the

PROPHESY approach on their own companies, theywere asked to rate PROPHESY against the requirementsthey specified at the start of the workshop. Not surpris-ingly, a lot of the requirements specified by managerswere closely related to the 23 requirements identifiedby the researchers in the literature. Table 3, summarizesthe results of these workshops. These led the researchersto conclude that PROPHESY process is an acceptableand useable tool which would objectively facilitateStrategy Management through business processes. Withthis conclusion the theory-building phase of the researchwas completed.

6. Theory testing: action research basedexperimentation

The underlying assumption at the beginning of thisresearch was that a process-focused approach to strategymanagement would have certain positive and negativeeffects on organizations when compared to functional-focused approaches to strategy management. Although


Figure 2. The PROPHESY process.

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it was not clear what these effects would be, the objectiveof this research was to develop a better understanding of the

effects of managing strategy through business processes.In this action research phase of the work, it would have

been ideal if it were possible to work with companies tofacilitate two different approaches to strategy manage-ment, functional-based and process-based, and comparethe results. It would be appreciated that research of thisnature requires significant management time and it

would have been impossible to find companies to under-take adopt two different approaches to strategy manage-ment. With this constraint in mind four companies wereidentified who had experienced functionally basedapproaches to strategy management in the recent pastand who were willing to adopt PROPHESY. This pro-vided the experimental basis where PROPHESY couldbe facilitated in these companies and continually monitorthe users’ reactions.


Table 2. Summary of tools and techniques.

Stage Adopted tools and techniques Alternatives considered Reasons for decision

InputMission statement Ashridge’s mission model None No step-by step

alternativeBusiness Unit definition Order winning/order qualifier

Complexity/Uncertainty matrixProduct process matrix

Focus Strategy Management businessunits based on competitive criteria

No alternative method todefine business units interms of products,markets and processes

Financial statement Profit and loss account Balance sheetCash flow statement

P&L is most commonlyused by the target groupcompanies

Business objectives Structured but open questionsCompany’s current andpast strategy

Strategy chart Experience curve Provide rich source oflearning

FormulationBusiness unit analysis Summary profit and loss account

Market profilingCompetitive positioningProduct life cycle, SWOTanalysis

Shareholder value analysisTOWS analysis, S curveExperience curvePorter’s 5 industrial anlayses

Ease of use andconvenience

Business unit positioning Extended gain versus growthmatrix

Market growth rate versus marketshare and versus SBU rateProfits growth rate versus %cash earningBusiness growth rate versus RONABusiness strength versus industryattrac.

Alternatives were testedwith potential users.Tools deemed mostuseful were selected.

Business unit/processesperform. and value prop.

Combination of IPMS and QFD HoshinCambridge University PM, IPMS

Best fit

Business unit’s valueproposition

Treacy and Wiersema’s valueproposition

Richardson, Miles and Snow, Milesand Roth

Best fit – from marketperspective

Business/business unitobjectives deployment

Quality Function Deployment/Hoshin Planning Tools

Seven Management Tools (e.g. affinitydiagram, tree diagram etc.)

Best fit, easy to use

Business processdefinition

CIM-OSA architecture Porter, IBM, PA business processmodels

Most comprehensive andgeneralizable and best fit

Strategy ImplementationStrategy implementation Modification of Hrebiniak and

Joyce’s strategy implementationmodel

None No alternative methods

Strategy action planning Hoshin planning techniques Other strategic management processaction plans’ designs

Convince and easy to use

Validation of objectivesand actions

Objectives validation byconnecting future profit andloss account

None Developed by theresearchers as noalternatives wereavailable

Trade-off andconsolidation

Trade-off and consolidationmatrix

None No alternative method

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Although, this phase of the research involved four dif-ferent manufacturing companies, in this section the use ofthe prophesy process in one of these companies is demon-strated, namely Stephen Clark Ltd. Again, it will beappreciated that because of space limitations it has notbeen possible to include all stages of the PROPHESYapproach, only the points considered important havebeen described in the case study.

6.1. Case study: Stephen Clark Ltd.

Stephen Clark Fabrications was founded in 1947 and isone of the UK’s leading sheet metal and enclosure man-ufacturers. Located in Scotland, they currently supplyproducts to companies in over 40 countries throughoutthe world. Stephen Clark offers the complete service rightfrom design through to the delivery. The mission ofStephen Clark is ‘To continue to be the leading providerof high quality products in the life science industry’.

Business unit definition. Figures 3–8, in sequence, illustrate,the business unit definition stage of the PROPHESYworkbook. Figure 3 illustrates how customers aregrouped according to competitive criteria consideringdifferentiators and qualifiers simultaneously. Figure 4illustrates how the product groups are analysed withrespect to the market groups identified in figure 3. Atthis stage it may be desirable to combine or split someof these market groups based on similarities or differencesof their product characteristics. Figure 5 illustrates howthe market groups (from figure 3) are analysed using thecomplexity and uncertainly matrix. Again here it may be

desirable to combine market groups if similarities couldbe justified. Figure 6 summarizes the customers and pro-ducts/product groups for each market group, which arethe analysed in the product/process matrix (figure 7)resulting in the final definition of the business units(figure 8) together with the competitive factors, custo-mers and products and sales turnover for each businessunit.

Financial profiling. The past and present financial profileof the business is collected in the form of profit and lossaccounts. This company wide financial information isthen broken down into Business Unit specific profit andloss accounts.

Setting business objectives. At this stage management is alsoasked to visualize a desired future profit and loss accountfor three years hence as well as specifying measurablebusiness objectives that would facilitate the achievementof the future desired profit and loss account. These objec-tives are structured as Growth, Profitability and Others.In order to be actionable, relevant performance measuresdefined and ranked for each objective figure 9.

Strategy formulation. The Formulation stage starts withconsolidation of all the key business unit data into busi-ness unit fact sheets, figure 10.

Based on the information provided on the fact sheetsthe growth/gain matrix is used to position each businessunit against one another to facilitate strategic decision onthe future of each business units, such as invest, buy, sell,milk, etc. This decision then leads on to development


Table 3. Strategy management process performance.

The strategy could be judged a success if it is . . .Managers ratings

10 ¼ excellent, 1 ¼ poor match

Achievable and realistic 9/10Flexible 8/10Clear and specific 7/10Efficiency and effectiveness 8/10Monitorable, testable and review 8/10Awareness, comfort 8/10Measurable 9/10Understandable 8/10Clear direction 8/10Commitment from different levels 9/10Ownership at all levels 9/10Covers all stakeholders needs 8/10Benchmark and review 7/10Consider all levels of the organization 10/10Focus on processes 10/10Communicable to workforce 8/10Deploy business objectives to business processes 9/10

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Fig

ure

3.

Com

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4.

Pro

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Com

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6.

Mark

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Pro

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ix.

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8.

Ste

phen

Cla

rk’s

busines

sunit.

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of priorities for each business unit in relation to overallbusiness objectives specified in the previous step. At thisstage the formulation of a value statement for eachbusiness unit is also encouraged. The strategy statementfor each business unit is formulated, which is embeddedwithin the strategy statement of each business unit.

In Stephen Clark’s case the Inter Company BusinessUnit

. has been unsuccessful dealing with profitabilityobjectives because of currency exchange rates,poor quality and marketing. Location, design, inno-vation and technology are Business Units strengths.Dynamic environment and market has resulted incostly products.

. market is growing; its market share is growingwhich is 25% of the total market. Although oneproduct group (lab stainless) is considered matureits remaining life is ten years. Other product group(incubator) is still growing but it has eight years todecline. With these products, Business Unit’s con-tribution to the business profit is rated as average.

. differentiators reflect a product leadership strategyto reduce time to market, to produce new designand style to product and improve customer supportby providing skilled people who could customize theproduct and enhance responsiveness.

It can be summarized that: As a result the Companydecided to adopt the following direction for this particu-lar business unit: The value proposition of this Business Unit

is Product Leadership by introducing new products to existing

markets (mainly incubators) by offering improved functionality

and by improving customer support.

The Inter Company Unit decided to address explicitlyhow it provided value to external customers (currentlydelivery time and customer support in line with compe-titors). In the past, the managers felt that as long as itoffered product design using skilled people, it had deliv-ered desired value to the customers. The value proposi-tion therefore had to emphasize ‘support to customer byskilled people’. However, Inter Company Business Unitnow wanted to move beyond a pure design product strat-egy to more value added customer relationships thatleveraged the value of the technology, expertise anddesign services it provided.

Business processes. From this point onwards the process isapplied to each business unit to formulate strategies forthe business processes within each business unit. Hoshin(Babich 1999) techniques are used to deploy business unitobjectives to business processes using operational perfor-mance measures and targets (table 4). Figure 11 illus-trates how business unit objectives are first deployed tooperate processes then through these operate processes toselected support processes.

Further analysis of each business process, in a similarmanner to that for business units as described above,leads to a prioritized development plan for each businessprocess. Generate Demand process analysis within InterCompany Business Unit is explained in figure 12, wherebetter market information on customer requirementswould maximize new incubator product development’sopportunity and improve functionality. One of the mostimportant characteristics to be highlighted in this processwould specify new incubators through market research,


Figure 9. Stephen Clark’s top level objectives.

Figure 10. Business unit fact sheets, summarizing the strategic history as well as the financial, market, product, competitive andSWOT profile for each business unit.

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which would increase sales of incubators. A good knowl-edge of the market, the technology, and the whole indus-trial environment would result in contacting and gainingmore customers (20% increase customers year by year),but limited strength of the sales force recruitment is aconstraint (table 4).

Trade-offs. The strategies devised for each business pro-cess is then cross-checked to ensure that any potentialconflicts are identified prioritized and trade-off decisionsare made. This leads to the development of a consoli-dated operations development plan, i.e. operationsstrategy for the business.


Figure 11. Deployment of business unit objectives to operate and support processes.

Table 4. Generate demand process’ objectives, performance measures and targets.

Generate Demandobjectives Priority Measured By

Currentperformance

Targetperformance Constraints

Better market information 1 Customer requirements In 5 years AnnuallyImprove customer confidence 3 Potential/actual orders < 80% 100%Specify new incubator frommarket research

2 Time or hours per person < 1 hour peryear per person

> 5 hours/year/person Training

PART 7: STA TEGY IM PLEM ENTAT IO NPAR T 7: STATEGY IM PLEM ENTAT IO N

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Figure 12. Objectives validation.

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After comparing each business unit’ objective, StephenClark realized that Fabrication (a business unit theyoriginally planned to invest in) and Enclosure &Cubicles (a business unit which they originally decidedto sell off ) have got similar objectives. This suggestedthat the strategic action plan for Fabrication BusinessUnit would improve the performance of Enclosures andCubicles Business Unit. For this reason, the companydecided to keep Enclosures & Cubicle Business Unit forthe time being and monitor its performance.

Validation of strategy. Before implementation, the selectedstrategy is tested against the desired future profit and lossaccount by linking operational performance measures tofinancial results by asking questions such as ‘what %increase in market share will be expected as a result ofimproving delivery performance from 73% to 98%’(figure 13). Although this is a qualitative linkage betweenoperational performance measures and financial results,the researchers experience is that it is well received by themanagers and it promotes ownership of the chosenstrategy.

As a result of this analysis the chosen strategy is eitheraccepted as it is or modified until a desired level of busi-ness performance is achieved. Once a particular strategyis accepted it is then implemented using normal projectmanagement practices which are also included as part ofthe PROPHESY workbook.

Learning and review. The Learning and Review stage isconcerned with the monitoring of the operationaland financial performance and the impact of the chosenstrategy on the selected performance measures. Leadingindicators are used to provide early feedback on the per-formance/effect of the chosen strategy allowing thePROPHESY process to restart if and when interventionis deemed necessary. There are a number of points whereintervention can start, for example if the changes effectonly a business process then the scope of intervention canbe limited to that business process, or if the changes effectthe competitiveness of a business unit the scope of inter-vention could be limited to a business unit and its busi-ness processes.

7. Synthesis

In this section the findings and conclusions of thisresearch are summarized based on:

. Results of the validation interviews and workshops.

. Individual conclusions of the four detailed casestudies – namely Meyer and Burger in

Switzerland, Applecross, Sun and Stephen Clarkin Scotland.

. Conclusions of the cross case analysis conducted onthe findings of the each case.

However, before outlining the final conclusions and find-ings of this research it would be prudent to discuss someof the limitations of the research.

Although the PROPHESY approach was applied infull in all four interventions, the learning and reviewcycle remains relatively untested. In short, the use ofthe PROPHESY process was not monitored overmedium- to long-term due to time limitations. Howeverduring the interventions, the process captured emergentstrategies from the companies’ history and used this infor-mation to facilitate creation of future strategies. It maybe argued that this in itself is a test of the learning andreview phase. In order to test how business process-oriented approaches to strategy management impact inthe medium- to long-term research programmes of long-itudinal nature extending over three to five years arerequired.

It would not be correct to argue that the findings of theresearch are generalizable based on four interventions(experiments). However, it is argued that findings arevalid for the four case studies included in the research;therefore they are likely to be valid for other organiza-tion. The findings and conclusions of this research arepresented under following headings.

7.1. Impacts of business-process oriented approach

. It became apparent, through the validation inter-views and workshops, and through the four inter-ventions, that managers and companies would bewilling to transform their strategy managementmethods from a functional to a process-basedapproach.

. In all four interventions PROPHESY process wasused successfully through all of its phases developingstrategies at different levels (e.g. business unit,business processes) of the companies.

. All four companies, from previous interventions,already had developed strategic objectives. In allfour cases the process-based approach, i.e. thefocus on business processes, has provided a newinsight, which has highlighted a number of issuesand led to development of new objectives andchanges to existing objectives. Hence, this experi-ence suggests that a business-process orientedapproach assists in the development of more rele-vant and complete strategic decisions, objectives


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and performance measures, in comparison to func-tional oriented approaches.

. The ability to link business process level perfor-mance measures to business and financial resultsprovided greater ownership and confidence at alllevels of management.

. The process-oriented approach helped the manage-ment focus on the value-adding business units andprocesses of the company.

. Prescribed approaches to strategy managementsuch as, PROPHESY, have been criticized forignoring the people dimension (Rhodes 1991) as ittakes a hard systems view (Checkland 1999).Hammer (1997), in his discussion of how radicalredesign in Business Process leads to dramaticimprovement, concludes that re-engineering hastwo dimensions. ‘The first entails organizing a com-pany and the people end-to-end sequences of tasksrather than around individual tasks. The second isrethinking the design of those processes and howthey are performed’. The thinking behind thisresearch lies closely with Hammers view. In shorttaking a business process oriented approach (usinghard system view), whilst using PROPHESY as atool to facilitate key decisions makers at all levelsof an organization to agree on strategic decisions(i.e. a soft systems view) a process-orientedapproach facilitates integration of people into thestrategy management process.

. Business process-oriented approach facilitates inte-gration between the resource based approach andmarket based approach to strategy management asillustrated in figure 14. Each number as shown isexplained as follows:(1) Identify priorities for each business unit.(2) Each business unit is prioritized according to

contribution to business objectives.(3) Deploy business unit objectives to business pro-

cess with performance measures but no firmdecisions are made with what to do withineach business unit.

(4) Integrate the various strategies of businessprocesses and business units and identify con-flicts and complements.

(5) Decide trade-offs for each business unit andprocess.

7.2. Impacts of adopting a prescribed approach to strategy

management

The PROPHESY process is considered to be a pre-scribed approach to strategy management as it prescribesthe sequence of activities and tools to be used within the

process of strategy management. The following pointssummarize the conclusions of this research with respectto the use of a prescribed approach to strategy manage-ment:

A group of researchers were attending a trainingsession on PROPHESY where the Stephen Clark casestudy was presented. During the presentation, thedelegates were able to identify discrepancies in the datapresented and decisions taken. In other words, indepen-dently they were able to audit the strategic decisionsmade by a company which they were not familiar with.It can be concluded that prescriptive approaches to strat-egy management makes the whole process independentlyauditable.

The prescriptive approach, because of its logical struc-ture made the process repeatable. Repeatability of theapproach was particularly useful when the decisionsand the rationale behind these decisions had to beexplained to managers and others who were not involvedin the process in the first instance.

7.3. Other observations

The majority of approaches to strategy managementmake decisions about what businesses they are going tobe in (i.e. at business unit level) before analysing thestrategic options for each business unit. However, theexperience with Stephen Clark suggests that, at opera-tional level, strategic decisions taken for one business unitcould impact in a positive or negative way to anotherbusiness unit. It is therefore recommended that the entirebusiness is analysed first and the potential conflicts andpositive relationships are identified at operational levelsbefore strategic decisions at business unit level (such asdivest, invest, buy, sell, milk, etc) are finalized.


Operations

Strategy

Tangible &IntangibleResources

OperationsCapabilities

OperationsProcesses

OperationsDecisionAreas

Understandingresources &processes

StrategicDecisions

RequiredPerformance

UnderstandMarket

CustomerNeeds

MarketPositioning

CompetitorActions

PerformanceObjectives

The operations resource perspective on

operations strategyThe market perspective on

operations strategy

112233

44

55

Figure 13. Operations strategy process (adopted from Slack,2001).

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The research demonstrated that operations strategy ismore than a deployment of resources and processes in thelong term and business strategy should focus on creatingvalue that is independent for each business unit value.This means developing horizontal strategies that co-ordi-nate business processes and develop objectives thatencourage the sharing of resources and skills.

Managers need to focus on their market characteristicsand tackle their daily problems as well as sustain theirmarket position in the long term. In this sense, the con-tinuation of the PROPHESY process seemed to havehelped in contributing to the robustness of the decisionto agree on objectives and strategies.

In theory, asking the managers how they competewithin different markets was supposed to force them tothink about the purpose of focusing on different marketsin line with customer requirements. Thus enabling themto identify what they were really offering to their custo-mer and how they were adding value to their customerswithin different market/focus groups. Facilitation of eachsection to define the company’s business units and theirvalue propositions worked very well. Managers who wereinvolved in the project noticed the importance of seg-menting the company by encouraging them to thinkabout how they should try to win orders.

8. Conclusion

The point of departure of the work presented in thispaper is that value is created and strategies are realized atbusiness processes level, therefore, and an integratedapproach to strategy management should deploy strate-gic objectives to business processes where they can beimplemented. Further, to cope with ever-increasing rateof change in the operating environment of a businessstrategy management should be a continuous businessprocess, which provides a closed-loop-control system tofacilitate management of the organizations performance,as a whole and in parts. The objective of the research wasto develop a better understanding of the effect of managing strategy

through business processes.

The paper, based on a comprehensive literaturereview, presented a set of requirements such a dynamicstrategy management approach/process should fulfil. Itcompared existing approaches to these requirements andestablished that none of the existing approaches indivi-dually was able to fulfil this requirement in their entirety.It then went on to introduce the research instrument,PROPHESY, which was developed to facilitate thedevelopment of better understanding of the effect ofmanaging strategy through business processes. Theapproach developed was used in four action research-

based interventions where the researchers acted asfacilitators.

The main findings of the research suggest that byfocusing on business processes to create competitiveadvantage and by combining existing strategic andoperations management tools and techniques abusiness-process oriented approach to strategy manage-ment can be created that has positive effects on theorganization, the perceived quality and acceptability ofstrategic actions. This paper has also demonstrated thatStrategy Management Process is more than the long-term deployment of resources and processes. Strategyshould focus on creating value that is independent foreach business unit. Consequently developing horizontalparallel strategies that have objectives of co-ordinatingbusiness processes and developing objectives that encou-rage the sharing of resources and skills.

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324 N. Acur and U. BititciA

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Managing strategy through business processes 32511.SM

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ount

ofvarious

conflic

tsand

trade-

off

for

each

BU

Feu

reretal

.1995,1995;Pla

tts

etal

.1998

��

��

��

��

�&p

��

��

��

��

��

��

13.T

raditio

nalstra

tegic

dec

isio

nare

asin

oper

ations

stra

tegy

should

be

applied

at

busines

spro

cess

level

Talw

ar

1997;R

hodes

1991

��

��

��

��

��

��

��

��

��

��

��

14.Per

form

ance

mea

sure

men

tsh

ould

arise

at

two

level

s:Exte

rnaland

Inte

rnal

Glo

ber

son

1985;Sch

roed

eretal

.1986;

Kapla

nand

Nort

on

1996;D

ixonetal

.1990;Leo

ngetal

.1990;A

nder

son

etal.1991;H

ill,

1993;Pla

tts

and

Gre

gory

1996;H

ull

and

Wu

1997;

Nic

hola

s,1998

�p

&p&p

�p

�&p

��

p�

�&p

&p�

�&p

��

pp

15.Exte

rnalper

form

ance

mea

sure

ssh

ould

pro

vid

ean

input

tostra

tegy

managem

ent

pro

cess

Kapla

nand

Nort

on,1990,1996,

2001;M

ark

ides

2000;Bititci

etal

2000;M

illsetal

.1998;Pea

rce

and

Robin

son

1988

�&p

&p&p

�p

�&p

��

��

��

&p�

&p�

&p�

��

16.SM

Psh

ould

inte

gra

tein

tern

al

and

exte

rnal

Pla

tts

and

Gre

gory

1996;Babic

h1999;K

apla

nand

Nort

on

2001

�&p

&p&p

�p

�&p

��

p�

��

&p�

��

��

&pp

17.SM

Psh

ould

maxim

ise

feasibility

ofth

estra

tegy

Huber

and

Pow

er1985;R

am

anuja

metal

.1986;Pla

ttsetal

.1996;Fahey

1998;G

odet

1998;Seg

ard

and

Gro

ver

1999;Seg

ars

etal

.1998;Sim

on,2000

�p

pp

&pp

�&p

��

&p�

��

&p&p

&p�

��

&pp

18.SM

Psh

ould

make

the

link

bet

wee

na

chose

nstra

tegy

and

expec

ted

oper

ationalben

efit

clea

r

Pea

rson

and

Robin

son

1988;

Ram

anuja

metal.1986;G

oodm

an

and

Law

less

1994;K

apla

nand

Nort

on

2001

�p

&pp

��

&p&p

��

��

&p&p

&p�

��

�&p

&pp

19.T

her

eis

nee

dfo

ra

form

al,

wel

ldefi

ne,

under

standable

,adapta

ble

and

flex

ible

pro

cess

tofa

cilita

testra

tegy

managem

ent

Andre

ws1987,D

igm

an

1990;Pea

rson

and

Robin

son

1988;Pla

ttsetal.1996;

Kapla

nand

Nort

on

2001

pp

&p&p

pp

��

&pp

&p&p

��

&p&p

&p�

�&p

pp

20.SM

Psh

ould

resu

ltin

agood

docu

men

tation

with

acl

ear

and

det

ailed

pla

n,in

cludin

gcl

ear

resp

onsibility

for

act

ions

Andre

ws1987

Pea

rson

and

Robin

son

1988;Feu

reretal

.1995;Babic

h1999

&pp

p&p

pp

��

��

&p&p

��

&p�

��

��

p�

21.SM

Psh

ould

faci

lita

tele

arn

ing

from

exper

ience

Millsetal

.1998;Babic

h1999;K

apla

nand

Nort

on

2001

�p

&p&p

��

��

��

��

��

��

&p�

��

�p

continued

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nloa

ded

by [

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ts U

nive

rsity

] at

09:

21 2

2 O

ctob

er 2

014

326 N. Acur and U. BititciA

ppen

dix

:Continued

.

Req

uirem

ents

pC

over

ed&p

Lim

ited

cover

age

�N

ot

cover

ed

Ref

eren

ces

Existing

Appro

ach

esto

Str

ate

gy

Managem

ent

[1][2

][3

][4

][5

][6

][7

][8

][9

][1

0][1

1][1

2][1

3][1

4][1

5][1

6][1

7][1

8][1

9][2

0][2

1][2

2]

22.SM

Pre

quires

signifi

cant

inte

gra

tion

bet

wee

nstra

tegic

thin

kin

gand

stra

tegic

pla

nnin

g

Sch

roed

eretal.1986;H

ort

eetal.1987;

Dig

man

1990;H

ull

and

Wu

1997;

Kapla

nand

Nort

on

2001

p�

p&p

&p�

&p�

��

�&p

&p&p

&p�

�&p

�&p

&pp

23.SM

Psh

ould

enco

ura

ge

innovation

thro

ugh

pro

vid

ing

manager

sw

ith

all

busines

soption

s,stre

ngth

sand

wea

knes

ses,

ther

efore

,m

akin

gth

emcr

eative

Rum

elt

1980;Port

er1996;

Her

ocl

eous

1998;M

intz

ber

g1999

&pp

pp

pp

p�

p&p

p�

p�

&p�

p&p

&p&p

pp

[1]

Dig

man,L.A

.(1

990

)

[2]

Pea

rce,

J.A

.and

Robin

son,R

.B.(1

998

)

[3]

Thom

son,A

.and

Str

ickla

nd,A

.(1

999)

[4]

Goodm

an

and

Law

less

(1994

)[5

]A

ndre

ws,

K.R

.(1

987

)

[6]

Whee

len,T

.L.and

Hunge

r,J.

D.(2

001)

[7]

Chakra

var

thy,B.and

Lora

nge,

P.(1

991

)[8

]Lynch

(1997

)

[9]

FO

CU

S(2

001

)

[10]

Skin

ner

,W

.(1

969

)

[11]

Fin

e,H

.C

.and

Hax,C

.A

.(1

985

)[1

2]

Sch

roed

er,R

.G

.,Scu

dder

,G

.D

.and

Elm

,D

.R

.(1

986

)

[13]

Hort

e,S.A

.,Lin

dber

g,P.and

Tunalv

,C

.(1

987)

[14]

Leo

ng,C

.G

.K

.,Snyder

,D

.L.and

Ward

,P.T

.(1

990

)

[15]

Ander

son,J.

J.C

.,Sch

roed

er,R

.G

.and

Cle

vel

and,G

.(1

991

)[1

6]

Hill,

T.J.

(1993)

[17]

Pla

tts,

K.W

.,M

ills,J.

F.,

Nee

ly,A

.D

.,G

regory

,M

.J.

,R

ichard

s,A

.H

.(1

996

)and

Pla

tts,

K.W

.and

Gre

gory

,M

.J.

(1990

)

[18]

Hull,R

.and

Wu,B.(1

997)

[19]

Edw

ard,C

.and

Pep

ard

,J.

(1994)

[20]

Talw

ar,

R.(1

993

)

[21]

Feu

rer,

R.and

Chaharb

agh

i(1

995)

[22]

Kapla

n,R

.S.and

Nort

on,D

.P.(2

001

)

Dow

nloa

ded

by [

Tuf

ts U

nive

rsity

] at

09:

21 2

2 O

ctob

er 2

014

Documents

Managing strategy through business processes