Managing strategy through business processes

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  • This article was downloaded by: [Tufts University]On: 22 October 2014, At: 09:21Publisher: Taylor & FrancisInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House,37-41 Mortimer Street, London W1T 3JH, UK

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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, 309326

    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. Todays 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: nuran@iprod.auc.dk andUmit Bititci, Centre for Strategic Manufacturing, University of Strathclyde, DMEM, Glasgow,UK, E-mail: u.s.bititci@strath.ac.uk

    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 09537287 print/ISSN 13665871 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 organizations 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, OperationalFunctional 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 abetter understanding of the effect of managing strategy throughbusiness 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 organizations 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

    de-o

    ff

    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 SupportProcess 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 ofclosed loop strategy management process is based on afurther development of Demings 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-

    312 N. Acur and U. Bititci

    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-panys 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

    Managing strategy through business processes 313

    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 theeffects of managing strategy through business processes.

    In this action research phase of the work, it would havebeen 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.

    314 N. Acur and U. Bititci

    Table 2. Summary of tools and techniques.

    Stage Adopted tools and techniques Alternatives considered Reasons for decision

    InputMission statement Ashridges 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 questionsCompanys 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 curvePorters 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 units valueproposition

    Treacy and Wiersemas 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

    Joyces 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 UKs 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 38, 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

    Managing strategy through business processes 315

    Table 3. Strategy management process performance.

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

    10 excellent, 1 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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  • 316 N. Acur and U. Bititci

    Figure

    3.Competitivecriteria.

    Figure

    4.Product

    groups.

    Figure

    5.Complexity/uncertainty

    matrix.

    Figure

    6.Market

    groupevaluation.

    Figure

    7.Product/process

    matrix.

    Figure

    8.Stephen

    Clarksbusinessunit.

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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 Clarks 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 Units 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 Unitis Product Leadership by introducing new products to existingmarkets (mainly incubators) by offering improved functionalityand 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 developmentsopportunity and improve functionality. One of the mostimportant characteristics to be highlighted in this processwould specify new incubators through market research,

    Managing strategy through business processes 317

    Figure 9. Stephen Clarks 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.

    318 N. Acur and U. Bititci

    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

    7 .17 .1 . O pera te O b jec tiv es V a lid a tionB usin e ss P roce ss

    ...

    O b jec tiv e s

    C u rren t

    P e rfo rm anceT a rge t

    Pe rfo rm ance

    B usine ss Im pac t

    (2001 + 2 )C ost

    F u tu re P ro f it andL oss A ccoun t(C+ 2001+2 )

    G en era te D em and

    B ette r m ark et in fo rm a tion

    Spe ci fy n ew in cuba to r

    from m arke t resea rch

    Im prove c u stom e r con ta c t

    C ustom erre sp onses b ycon tac t

    Q ua rter ly

    N um ber o f

    in cuba to rs

    pe r y ear

    < 1 hou r pe r

    y ear p / p e rson

    > 5 hou rs /

    y ear / pe rson

    D eliv ery tim e 100 + (cu rren t

    c u stom e rs)

    + 20 %

    pe r /ye a r

    M easu red By .

    D eve lop P roduc t

    D esign fo r m anu fa c tu re N ew des igns > 2 per ye a r 2 pe r y ea r

    N ew pro to ty pes

    fo r products

    2 pe r y ea r

    L ess re jec ts

    in te rna lly> 3 per w ee k

    D eve lop new de sign s

    Im prove qua lity< 1 per w eek

    2 pe r y ear

    10K B 15% sa le sin crea se

    B 30K

    B 20KB 100 K ex tra

    sa le s28K

    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

    Managing strategy through business processes 319

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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 strategymanagement

    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.

    320 N. Acur and U. Bititci

    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 companys 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 strategythrough 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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    Managing strategy through business processes 323

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  • 324 N. Acur and U. BititciAppendix:Requirem

    ents

    ofadynamic

    approach

    tostrategymanagem

    ent(SM)andcriticalcomparisonagainst

    existingapproaches

    toSM.

    Requirem

    ents

    pCovered

    &pLim

    ited

    coverage

    Notcovered

    References

    ExistingApproaches

    toStrategyManagem

    ent

    [1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20][21][22]

    1.Strategymanagem

    ent

    should

    beviewed

    asa

    key

    businessprocesses,

    i.e.

    Strategy

    Managem

    ent

    Process

    (SMP)

    PearceandRobinson1998;Ansoffand

    McD

    onnell1990;WheelenandHunger,

    2001;Childeetal.1994,1995;Goodman

    andLawless1994;Bititcietal.1999,2000

    &p

    2.SMPshould

    be

    continuous

    Thomson1997;Goodman.andLawless

    1994;Edward

    andPepard

    1994;Feurer

    etal.1995;CowleyandDomb1997;

    Balogunetal.1999;Babich1999;

    KaplanandNorton2001

    pp

    p

    p

    &p

    &p

    &p

    pp

    3.SMPshould

    providea

    closedloopcontrol

    system

    GoodmanandLawless,1994;Edward

    andPepard

    1994;Feureretal.1995;

    Babich1999;CowleyandDomb1997;

    KaplanandNorton2001

    &p

    p

    &p

    &p

    pp

    4.SMPshould

    havean

    eventdriven

    trigger

    mechanism,i.e.

    externalmonitor.

    GoodmanandLawless,1994;Feurer

    etal.1995;KaplanandNorton2001

    p

    p

    &p

    p

    5.SMPshould

    focuson

    businessunitsXBU)

    PlattsandGregory

    1990;Lynch

    1997;

    HullandWu1997;FOCUS2001;

    Lapierre2000;KaplanandNorton2001

    p

    p

    p

    p

    &p

    pp

    p

    6.SMPshould

    focusonits

    competitivestrategyand

    customer

    valueproposition

    foreach

    businessunit

    Lynch

    1997;Walter

    andLancaster

    2000;KaplanandNorton2001

    FOCUS2001

    p

    p

    7.SMPshould

    consolidate

    variousBU

    strategies

    takinginto

    accountof

    variousconflicts

    and

    trade-offsto

    develop

    operationsstrategy

    Digman1990;Corbettand

    Wassenhove1993;Millsetal.

    1998;Feureretal.1995

    &p

    &p

    8.SMPshould

    integrate

    amultiple

    levelsof

    hierarchy

    HoferandSchendel,1986;Wheelwright

    1984;Digman1990;Pearceand

    Robinson1988;andFOCUS2000

    pp

    p

    p

    pp

    pp

    &pp

    p

    p&p

    pp

    &p

    9.SMPshould

    beflexible

    withmultiple

    entrypoints

    tofacilitate

    rapid

    review

    andredeploymentof

    strategy

    Babich1999;Feureretal.1995;

    KaplanandNorton2001

    &p

    &p

    &p

    p

    p

    10.OperationsStrategyforeach

    businessunitarisesatbusiness

    processes

    level

    Hill1993;DeM

    eyer

    andFerdows

    1987;LongandVickers1985;

    Hayes

    andUpton1998;Hayes

    and

    Pisano1994;Bititci

    etal.1999,2000

    p&p

    pp

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  • Managing strategy through business processes 32511.SMPshould

    criticallyreview

    thecompanyobjectives

    and

    deploytop-level

    objectives

    throughalllevels

    FloodandJackson1981;Fahey

    1998;

    Feureretal.1995;Bititci

    etal.1999

    &p

    pp

    &p&p

    &p

    &p&p

    pp

    12.Continuationofrequirem

    ent

    7,operationsstrategyshould

    consolidate

    variousBP

    strategiestakinginto

    account

    ofvariousconflicts

    and

    trade-offforeach

    BU

    Feureretal.1995,1995;Platts

    etal.1998

    &p

    13.Traditionalstrategic

    decision

    areasin

    operationsstrategy

    should

    beapplied

    atbusiness

    processlevel

    Talwar1997;Rhodes

    1991

    14.Perform

    ance

    measurement

    should

    arise

    attw

    olevels:

    ExternalandInternal

    Globerson1985;Schroeder

    etal.1986;

    KaplanandNorton1996;Dixonetal.

    1990;Leongetal.1990;Anderson

    etal.1991;Hill,1993;Plattsand

    Gregory

    1996;HullandWu1997;

    Nicholas,1998

    p

    &p&p

    p

    &p

    p

    &p

    &p

    &p

    pp

    15.Externalperform

    ance

    measures

    should

    provideaninputto

    strategy

    managem

    entprocess

    KaplanandNorton,1990,1996,

    2001;Markides

    2000;Bititci

    etal

    2000;Millsetal.1998;Pearce

    andRobinson1988

    &p

    &p&p

    p

    &p

    &p

    &p

    &p

    16.SMPshould

    integrate

    internal

    andexternal

    PlattsandGregory

    1996;Babich

    1999;KaplanandNorton2001

    &p

    &p&p

    p

    &p

    p

    &p

    &pp

    17.SMPshould

    maxim

    isefeasibility

    ofthestrategy

    Huber

    andPower

    1985;Ramanujam

    etal.1986;Plattsetal.1996;Fahey

    1998;Godet

    1998;Segard

    andGrover

    1999;Segars

    etal.1998;Sim

    on,2000

    p

    pp

    &pp

    &p

    &p

    &p&p

    &p

    &pp

    18.SMPshould

    makethelink

    betweenachosenstrategyand

    expectedoperationalbenefit

    clear

    PearsonandRobinson1988;

    Ramanujam

    etal.1986;Goodman

    andLawless

    1994;KaplanandNorton

    2001

    p

    &pp

    &p&p

    &p&p

    &p

    &p

    &pp

    19.Thereisneedforaform

    al,

    welldefine,

    understandable,

    adaptable

    andflexible

    process

    tofacilitate

    strategy

    managem

    ent

    Andrews1987,Digman1990;Pearson

    andRobinson1988;Plattsetal.1996;

    KaplanandNorton2001

    pp

    &p&p

    pp

    &pp

    &p&p

    &p&p

    &p

    &p

    pp

    20.SMPshould

    resultin

    agood

    documentationwithaclear

    anddetailed

    plan,including

    clearresponsibilityforactions

    Andrews1987PearsonandRobinson

    1988;Feureretal.1995;Babich1999

    &pp

    p&p

    pp

    &p&p

    &p

    p

    21.SMPshould

    facilitate

    learning

    from

    experience

    Millsetal.1998;Babich1999;Kaplan

    andNorton2001

    p

    &p&p

    &p

    p

    continued

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  • 326 N. Acur and U. BititciAppendix:Continued.

    Requirem

    ents

    pCovered

    &pLim

    ited

    coverage

    Notcovered

    References

    ExistingApproaches

    toStrategyManagem

    ent

    [1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20][21][22]

    22.SMPrequires

    significant

    integrationbetweenstrategic

    thinkingandstrategic

    planning

    Schroeder

    etal.1986;Horteetal.1987;

    Digman1990;HullandWu1997;

    KaplanandNorton2001

    p

    p&p

    &p

    &p

    &p

    &p&p

    &p

    &p

    &p

    &pp

    23.SMPshould

    encourage

    innovationthroughproviding

    managerswithallbusiness

    option

    s,strengthsand

    weakn

    esses,therefore,making

    them

    creative

    Rumelt1980;Porter

    1996;

    Herocleous1998;Mintzberg1999

    &pp

    pp

    pp

    p

    p&p

    p

    p

    &p

    p&p

    &p&p

    pp

    [1]Digman,L.A.(1990)

    [2]Pearce,

    J.A.andRobinson,R.B.(1998)

    [3]Thomson,A.andStrickland,A.(1999)

    [4]GoodmanandLawless(1994)

    [5]Andrews,K.R.(1987)

    [6]Wheelen,T.L.andHunger,J.

    D.(2001)

    [7]Chakravarthy,B.andLorange,

    P.(1991)

    [8]Lynch

    (1997)

    [9]FOCUS(2001)

    [10]Skinner,W.(1969)

    [11]Fine,

    H.C.andHax,C.A.(1985)

    [12]Schroeder,R.G.,Scudder,G.D.andElm

    ,D.R.(1986)

    [13]Horte,

    S.A.,Lindberg,P.andTunalv,C.(1987)

    [14]Leong,C.G.K.,Snyder,D.L.andWard,P.T.(1990)

    [15]Anderson,J.

    J.C.,Schroeder,R.G.andCleveland,G.(1991)

    [16]Hill,T.J.

    (1993)

    [17]Platts,K.W.,Mills,J.

    F.,Neely,A.D.,Gregory,M.J.,Richards,A.H.(1996)andPlatts,K.W.andGregory,M.J.

    (1990)

    [18]Hull,R.andWu,B.(1997)

    [19]Edward,C.andPepard,J.

    (1994)

    [20]Talwar,R.(1993)

    [21]Feurer,R.andChaharbagh

    i(1995)

    [22]Kaplan,R.S.andNorton,D.P.(2001)

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    nive

    rsity

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    09:

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    2 O

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    er 2

    014

    first