Strategy and Business Process Management

Techniques for Improving Execution, Adaptability, and Consistency

Carl F. Lehmann

• Editorial: Auerbach Publications
• Año: 2016
• ISBN:
  9781466559264
• Edición: 1
• Categoría: Negocios y empresa
• Categoría: Gestión

This book prepares readers to master an IT and managerial discipline quickly gaining momentum in organizations of all sizes - Business Process Management (BPM). It describes how BPM treats processes as a portfolio of strategic assets that create and deliver customer and shareholder value and adapt, when necessary, enabling competitive advantage thr

Section I

Best Practices Used in Strategic Planning

Business strategy is essentially the art and science of formulating plans to align resources, overcome challenges, and achieve stated objectives. Achievement is fundamentally measured using a simple formula

R – E = P

where R = revenue, E = expense, and P = profit. For most organizations, revenue must be greater than expense (R > E). In the case of nonprofit and government organizations, revenue and expense should be equal (R = E). When strategy dictates innovation, growth, or expansion, operating at a loss (R < E) is acceptable, but only during planned investment phases of a business life-cycle.

Of course, given the challenges stated in the introduction, business strategy and the measurement of success are not this simple. Organizations often report anemic profit, disappointing returns on assets and capital, or unplanned expenses causing them to operate at a loss.

Why do so many organizations struggle with poor performance? To answer this question, an organization must examine the answers to other fundamental strategic planning questions:

• Were my objectives realistic and achievable?

• Did I misunderstand or underestimate the challenges?

• Did I have enough of the right resources?

• Was my strategy correct given my resources, challenges, and objectives?

Answering these questions requires analysis of visceral business concepts, such as competition, execution, measurement, control, and adaptation to change. All have been studied relentlessly by business schools, think tanks, and leading enterprises since the Industrial Revolution. Dozens of approaches and theories have been published in hundreds of textbooks, and in thousands of essays and articles. But a few seminal works on business strategy that emerged in the 1980s and 1990s have matured and are practiced with great success by industry leaders in every field. Those that stand out are

• Competitive Strategy: Techniques for Analyzing Industries and Competitors and Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter

• The Discipline of Market Leaders: Choose your Customers, Narrow Your Focus, Dominate Your Market by Michael Treacy and Fred Wiersema

• The Balanced Scorecard: Translating Strategy into Action and Strategy Maps: Converting Intangible Assets into Tangible Outcomes by Robert S. Kaplan and David P. Norton

• Adaptive Enterprise: Creating and Leading Sense-and-Respond Organizations by Stephan H. Haeckel

Although conceived in the 1980s and 1990s, these works are increasingly relevant today. They represent timeless common-sense approaches to business strategy and management. They offer proven and reliable best practices forged by years of pragmatic deployment by leading Fortune 500 and Global 2000 companies. Experience, iteration, and evolution have made them practical techniques for use by all organizations, large and small. In architectural and engineering terms, they represent the “pillars and arches” upon which modern business strategy and execution are founded.

All include common-sense themes on how best to formulate strategy, measure performance, and align resources, which are explored in this book. Of greater interest and importance, however, and the reason why I chose these particular works, are the best practice concepts unique to each author.

• Porter teaches organizations how best to compete.

• Treacy and Wiersema teach organizations how best to focus operations.

• Kaplan and Norton teach organizations how best to manage performance.

• Haeckel teaches organizations how best to adapt to change.

The best practice lessons from each of these authors successively build upon the others, providing a comprehensive approach to analyze and formulate a highly competitive business strategy. Collectively, these lessons create an unparalleled strategic planning framework, providing organizations with the insight and techniques necessary to command competitive knowledge, define strategy, and focus investment on high-priority areas, measure performance from multiple perspectives, and quickly respond to change or customer need.

Understanding business strategy is important, but how does this help you improve business processes and run your business better? Our intention is to put strategy and execution in context. What you seek from a business perspective (your strategy) derives the resources you require and how to structure them for achievement (execution). Successful practitioners do not view them as mutually exclusive. They have a deep understanding of these contextual relationships and use this awareness to consistently execute and improve adaptable processes that support the organization’s chosen business strategy.

Industry leaders begin a discussion on business strategy by first defining and analyzing the purpose of their organization and the environments in which they compete.

Prologue: The Management
Team Is Summoned

THE CEO SPEAKS

The CEO asked me to remain seated and silent behind him for the moment as the management team entered the boardroom. They had all met me briefly before, one on one. There was no need for a cordial reacquaintance. He greeted each attendee with a dismissive wave urging them to their seats, setting a tone consistent with the severity of what he was about to say. When all were settled he took his seat and began.

Ladies and gentlemen,

Two years ago our company was at the top of its game. We had been increasing revenues at a compound average growth rate of 42% for five consecutive years. We doubled our profit margins. Earnings before interest, taxes, depreciation, and amortization were consistently above 35%. Customer satisfaction was at an all-time high pushing us into the number 1 or number 2 positions in all our markets. As a result the management team and workforce all shared in a handsome bonus and profit-sharing plan. Our shareholders could not have been happier.

Tomorrow I’ll host a conference call with our major shareholders, investors, and Wall Street analysts telling them that for the second quarter in a row we will report a loss.

The seasoned executive then closed his eyes and exhaled as he bent his head, burying his chin in his chest. After a brief pause he looked up, rose from his chair, and leaned slightly forward to put both hands on the heavy mahogany conference table. He addressed the team in a resigned manner,

“What makes matters worse,” he said, “is that I cannot show positive guidance. I expect this news to cause our market cap to fall at least 20%. You know how our shareholders will react.

So! Before I meet with them I want some answers.

Who can tell me what has changed? And please don’t tell me it’s the economy. He leaned farther forward, bridging the distance from the team exclaiming, In the last two years three new competitors entered our markets and stole our customers. That doesn’t happen because of the economy.

Everyone at the conference table was frozen in an uncomfortable silence. None dared even move else they be called upon.

The CEO let the management team stew for a bit. Then, before anyone was able to respond he stood straight up, softened his demeanor, and changed his tone. He went into problem-solving mode. He wasn’t interested in placing blame or concerned about lack of motivation. He needed to put in motion a plan for the organization to realize again, and maintain, its leadership role. In a professional and assuring voice he continued.

Ladies and gentlemen, I know why we faltered and why our customers abandoned us. I know what changed.

For the last two years we have been doing everything just as we had for the prior five years. Our business strategy, products, and services; the way we managed partners and suppliers; the way we treated customers; the way we measured performance; the way we went to market; and the way we solved what we thought were our real problems: all performed exactly the way we did them when we climbed to the top two years ago.

Nothing changed!

But everything changed. And that, ladies and gentlemen, is our problem; we didn’t adapt to the change. Our customers, competitors, and the markets changed around us and we did nothing about it. Worse yet, we didn’t even see it coming.

He took his seat, leaned forward panning all in the room from right to left and continued.

We are all responsible for what happened and will be held accountable for fixing it. The board has called a meeting with me this afternoon and is likely to be calling for some swift changes. Now let me assure you. You are the finest group of people I have had the pleasure of working with in my career.

He sat back in his chair.

Together we have done wonderful things. Each of you possesses a unique set of skills and talents that are indispensable to this firm and its customers. Our sales and services teams are top notch professionals. Our customers love working with them. Our product management teams can solve problems and innovate circles around competitors. Our marketing teams make us look great and get us a seat at any table we seek. Heck, our engineering and manufacturing teams could turn a bag of dirt into a time machine if we found a customer willing to pay for it.

The team chuckled, and thankfully, the tension in the air eased.

No, we don’t need to change our people. We need to get back to basics. We need to take a fresh look at how we do things and figure out how we can do them better, consistently, while responding to change as it happens, so we keep these negative circumstances from reoccurring.

He rose from his chair.

That is why I introduced you to Mr. Lehmann and why I asked him to join us.

He turned back, looked me in the eye, and knowing no others could see, smiled and winked, affirming that I now had the undivided attention of a captive audience. Then he gestured for me to take his place at the head of the conference table.

* * *

What follows is a series of discussions I have with management teams on business strategy, process management, and techniques used by industry and thought leaders to improve execution, adaptability, and consistency. I set the stage for these discussions by calling out common business issues with which most management teams can empathize.

RUNNING A BUSINESS VERSUS RUNNING A BUSINESS WELL

There are many ways to measure performance. The balance sheet, income statement, various operating ratios, key performance indicators, and market and customer research are all part of monthly, quarterly, and annual assessments. Most of the metrics used to run a business help determine whether it is operating to plan or veering off course. As a professional, when you sense that you’re off course, you take action to get back on plan. But sometimes that is a bigger challenge than anticipated; and other times, even if you’re on plan, it may not be the right one when unanticipated changes force you back to the planning table.

The difference between running a business, and running it well, lies in how...