Transforming Corporate Strategies into Action – Part 2

Core Findings

The Role of Governance

Having a strategic management framework and utilising BPM to deliver the outcomes is a great way to achieve the business goals. However there is a very important aspect to this that requires a mention, governance. But what is it? In broad terms, corporate governance refers to the way in which a corporation is directed, administered, and controlled (Baker, 2010). Corporate governance sets the guidelines for good business practices and leads to greater accountability, integrity, efficiency, and transparency (Mardjono, 2005).

Research has found governance a key factor in enabling an organization to embed enterprise wide BPM effectively. (Doebeli et al. 2011)

If governance is not integrated from the strategic level through to operations, the organization could face an unruly situation, as evidenced by the collapse of Enron, an American energy company.  However, if the organization implements BPM governance correctly, it has been shown to increase business performance and improve stakeholder relations. (Doebeli et al. 2011)

Taylor (2000) describes the principles for organizational governance as:

  • Achieving strategic goals
  • Relationship between board of directors and CEO
  • Unity of direction
  • Unity of command
  • Unity of accountability/responsibility
  • Ownership needs
  • Self-improvement

With principles such as these, it is clear that governance in any context, such as within BPM, is the necessary binding element to effective business management. It is important in enabling the successful deployment of BPM across an organization (Doebeli et al. 2011) and without it Business Process Management would not be possible.

A study by De Bruin and Doebeli (2009) found there are many common interpretations of BPM, resulting in a lack of clarity over the term. A survey report conducted in 2008 (Doebeli et al. 2011) found over 40% thought BPM was a top down methodology.  As a result, businesses do not have a standard approach to implement BPM and often try to introduce it without a holistic and strategically aligned view of the organization.

Doebeli et al. (2011) believe businesses should think about employing BPM governance models to enable process direction and go further to say,

This would require the empowerment of business process owners, process orientated decision-making models, appropriate reward systems and supportive organizational structures.”

Spanyi (2003) also states “setting BPM governing principles would empower firms to make tough strategic choices and engage the entire organization in the construct of strategies more effectively”.

Add that to BPM, which provides an opportunity to increase competitiveness and longevity in the market place (Doebeli et al. 2011) and you have an invaluable business tool.

Discussion

Analysis of Findings

Based on the combination of theoretical literature, industry experience and relevant case studies, the subsequent structure was formed to create a cohesive and adaptable model derived from the business architecture and value chain approaches commonly seen in businesses (Figure 8) (Table 2).  The proposed framework can be adopted as a generic strategy to assist an organization in transforming their corporate strategies into realised benefits through the effective implementation of a process centric BPM approach.  This model is highly scalable and is able to integrate with existing management tools in place such as ISO standard management systems.

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Table 2: Key Elements of Each Unit in the Framework

The strategic management office and business process management are functional elements which form a symbiotic relationship and feedback to each other. The strategic management office runs on processes and the business process management strategy must be aligned to the corporate strategy to deliver value.

Similarly, the strategic management office will utilize the BPM system to gather information on the effectiveness and alignment of core business processes.  This will assist decision makers in identifying and prioritizing areas for improvement through the governance structure.

To ensure consistency across the organization and to maximize horizontal alignment between disparate business units, the strategic management office must coordinate with the business process management group.  A governance structure must be created and with clear identification of the expectations and responsibilities for each business unit. This governance structure sets the ground work for the business to operate. Some organizations will silo governance as a functional group similar to IT or HR but others will maintain governance as a function of senior management without the facilitation of a specialist team.  It would be more beneficial to roll the governance function into either the BPM function or the strategic management office.

The strategic management office which integrates and co-ordinates activities across functions and business units to align strategy with operations has four key processes (Figure 9).  These processes will see the transformation of corporate strategies into operational, achievable and measurable performance goals.

To analyze corporate strategies, companies can utilize techniques, such as the facilitation of workshops, to engage a cross section of stakeholders. Also, crucial conversations and mind mapping are ideal for these situations.  This fosters the creation of alignment through open dialogue around high-stakes, emotional, or risky topics. This technique provides visual representation of thoughts emerging from the dialogues (Patterson, 2012).

Once the key objectives are identified from the corporate strategy they can be further specialized and broken down into applicable goals for each business unit. This is best done using environmental scanning techniques like PESTEL or SWOT as these techniques allow for the incorporation of environmentally relevant context for the operationalization of the strategic elements related to specific business units (Fleisher & Bensoussan, 2014, Ha & Coghill, 2006). These techniques also assist in aligning the current opportunities and threats to the strategic outcomes, allowing for the prioritization of activities. The balanced score card or performance pyramid techniques are also used to help provide structure and rigor to this process (Figge et.al, 2002).

The development of key performance indicators (KPIs) can be developed from the information gathered through any of aforementioned techniques. It is important that the KPIs be representative of the actual outcomes of the process being measured and be easily collectible. Where possible they should be an objective measure rather than a qualitative or subjective measure (Parmenter, 2010). When choosing KPIs it is important to be conscious of the behavioral impact these measures may have.

Once the KPI`s have been established, ownership within the business group is essential for implementation to be successful (Parmenter, 2010). The development of commitment and ownership are key aspects to the work undertaken by both the BPM group and the strategic management office.

The example of the strategic management office in action (Figure 10) illustrates how corporate strategy can be transformed into operational terms for First Bank Nigeria (Firstbanknigeria.com, 2014).  The wheel shows how corporate strategy has been broken down into defined aspirations or objectives, relevant strategies and KPIs for two business units, group and bank.   For the purpose of this example, a further breakdown of the bank`s strategy shows four core components.  To project a clearer understanding of how the framework can be applied, strategy performance is assigned specific KPIs and owners for implementation.  BPM professionals can adopt this structure to operationalize corporate strategies, providing the underlying concepts of the framework are understood and implemented holistically to ensure greater likelihood of success.

Strengths

This framework is highly scalable and can be adopted in almost any type of organization. The underlying concept is strategic alignment which permeates the different levels of processes and is guided by strategic goals derived from the external environment.

The strategic management office and the BPM group work in a highly collaborative manner providing mutual support and influence on the business units across the organization. This close relationship coupled with the distinct and separate duties of the two groups provides a stronger multi-directional influencing paradigm to further embed process thinking within the organizational culture than either group could achieve individually.

Although the strategic management office is situated within the management processes, a portion of the business architecture and the output of this unit cascades into the core process of a business. At this point middle management carries out the identified process strategies. Utilizing governance as the lens through which each management or process layer is filtered, organizations can achieve the realization of values for the customer and positive business outcomes.

Limitations

This framework is reliable, robust, and rigorous governance.  For instance, where an organization has not defined the relevant requirements or is lacking in resources to ensure standards are maintained, there is the opportunity for the development of misalignment.

It is a holistic approach which must be implemented at all levels as opposed a set of tools that can be applied as needed.  Also highly autocratic organizations will struggle to implement this framework as there is heavy reliance on open communication.

The core of this framework is the interrelated and inter-reliant nature of the BPM and strategic management office. If these two entities are not effectively collaborating, the effective deployment of both groups will be hampered significantly.

Further work would need to be structured around an organization`s business process management maturity (BPMM) and its impact on this framework.  For example, organizations with a lower level of BPMM may have a tendency for operational silos (Roseman & Brocke, 2010) and may conflict with the need for collaborative efforts among the four elements of this integrated model.

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Conclusion

A lack of knowledge and acknowledgement of the processes around executing efficient strategy is one of the principle causes for failure in the implementation of BPM projects. Shortfalls associated with BPM can be costly to the business not only in terms of money, but also in terms of future success.

Failure to accurately assess reality can lead to an effective solution being overlooked and to effort, money and resources being spent on improvements that do not deliver value to the organization.

Collaboration between the stewards of strategy and the stewards of process can drive success throughout the business. When looking to implement BPM and process thinking, having influencing partners at all levels and guidance to ensure alignment will significantly increase the chances of success.

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Jeremy Ross, Trang Jerkic, Tony Penfold, & Hanadi Alwthinani

Jeremy Ross QUT Masters of Business Process Management Senior Auditor usdkaant@gmail.com Trang Jerkic QUT Masters of Business Process Management Business Improvement Analyst trang.jerkic@gmail.com Tony Penfold QUT Masters of Business Process Management Australia/ New Zealand EHS Manager tony.penfold@grace.com Hanadi Alwthinani QUT Masters of Business Process Management Business Process Management Consultant – Saudi Arabia x3ashat_ayamix@hotmail.com

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